Cebu State College of Science and Technology v. Misterio et al.

, GR 179025, June 17, 2015,

Peralta, J. (Conventional Redemption Period cannot exceed 10 years)
FACTS:
On Dec. 31, 1956, the late Asuncion Sadaya, mother of respondents, sold a land, Lot 1064, to
Sudlon Agricultural High School (SAHS). It was subject to repurchase after 1) SAHS shall have
ceased to exist or 2) shall have transferred its school site elsewhere.

BP 412 was enacted, consolidating several schools in Cebu, including SAHS, as part of Cebu State
College of Science and Technology (CSCST). Respondents heirs of Sadaya informed CSCST of
their intention to repurchase on the ground that SAHS had ceased to exist, but CSCST’s
superintendent Bonilla refused, saying that only the school’s name was changed.

Respondents filed a complaint in RTC for redemption against CSCST. RTC ruled against CSCST.
CA reversed, saying that prescription bars the action. The SC affirmed.

On Oct. 3, 1997, CSCST and province of Cebu executed a deed of reversion, where CSCST ceded
to Cebu the land and title was issued to Cebu.

Thus, respondents filed another complaint in RTC this time impleading Province of Cebu, claiming
that due to the transfer of school site, they can redeem the property. CSCST claims that the
complaint is barred by litis pendentia. RTC dismissed the complaint. CA held that there was no
litis pendentia because there was a different cause of action. Hence this petition.

ISSUE:
Whether respondents may be allowed to redeem the property.
HELD: NO.
CSCST claims litis pendentia. And even if there is no litis pendentia, there is lack of cause of
action.

1. For litis pendentia to exist, there must be 1) identity of parties or at least representing the same
interests, 2) identity of rights asserted and relief prayed for, 3) identity of the 2 cases such that
judgment in one would amount to res judicata in the other. For res judicata, there must be 1) final
judgment or order, 2) the court rendering it must have jurisdiction over the subject matter and the
parties, 3) it must be a judgment on the merits, and 4) there must be identity of parties, subject
matter, and causes of action. The test for identity of cause of action is “Would the same evidence
support and establish the present and former cause of action?” But here, the first cause of action
was the cessation of existence of SAHS. The second is whether SAHS had moved its school site.
Thus, there is no identity of cause of action.

2. Nonetheless, the petition must fail.

In cases of conventional redemption, Art. 1606 provides:

Art. 1606. The right referred to in Article 1601, in the absence of an express agreement,
shall last four years from the date of the contract.
Should there be an agreement, the period cannot exceed ten years.
 However, 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.
We have invalidated provisions allowing repurchase only after 10 years form execution of the
contract. Waivers of such period were also void, being against public policy. we also kept within
10 years those instances where parties agree to suspend the right until a certain time, event, or
condition, insofar as the 4-year period in the first par. would prolong the exercise of the right
beyond 10 years. When, for instance, the contract provides that the right may be exercised only
after 7, 8, or 9 years after execution of the sale, the redemption may be done only before expiration
of the 10-year period from the DATE OF THE SALE.

While the counting of the 4-year period shall begin from execution of the contract, where the
right is suspended by agreement until after a certain time, event, or condition, the period
shall be counted from the time such right could be exercised, but NOT EXCEEDING 10
years FROM EXECUTION of the contract.

Here, while the 4-year period was counted from the time the repurchase could be exercised or
when SAHS ceased to exist even beyond the 10years from execution, one must not lose sight of
the spirit and intent of the law. A long term of redemption renders tenure of property uncertain and
redounds to its detriment. Thus, to allow respondents to exercise the right to repurchase upon the
happening of the second resolutory condition when they failed to timely exercise it upon the
happening of the first would result in circumvention of the periods mandated by law.

Whether it be for a period of 4 or 10 years, the Court has stricken down as void stipulations
providing for an unlimited right to repurchase. It would be absurd to let respondents repurchase
the property upon occurrence of the second suspensive condition on Oct. 3, 1997 which is nearly
41 years after the execution of the deed of sale on Dec. 31, 1956.

Catangcatang v. Legayada, GR L-26295, July 14, 1978, Antonio, J. (Non-payment of price

does not suspend redemption period; in case of absence of vendee a retro, must tender or
consign)
FACTS:
On May 19, 1952, Legayada executed a sale with pacto de retro of 5 years over a land with stated
8.8ha area for P1.4K. Only P1.2k was paid. Catangcatang later found that the actual area was only
5ha, so he sued Legayada for the remaining area. Legayada filed a counterclaim for rescission
because of non-payment of the P200 balance. CFI dismissed both complaint and counterclaim.
This became final.

On June 29, 1957, Catangcatang filed a petition for consolidation of title. CFI found that Legayada
was unable to effect repurchase within the 5-year period stipulated and ordered consolidation of
title in Catangcatang. CA reversed, ruling that the failure to pay the full purchase price suspends
the running of the period of redemption. Hence this petition.

ISSUE:
Whether the non-payment of the price suspended the running of the redemption period.
HELD: NO.
The sale stipulated: “that if the vendor xxx shall pay xxx to the vendee xxx the purchase price xxx
on the date of expiration of a period of 5 years from and after the date hereof, then this sale shall
become annulled and of no effect xxx.”

The sale was consummated upon execution of the document and delivery of the land to
Catangcatang. The non-payment of the balance could not have the effect of suspending the
efficacy of the provisions thereof. The sale was perfected from the moment Legayada consented
to sell the land and Catangcatang agreed to purchase it for P1.4k. There was nothing 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. Contrarily, said period was agreed to be 5
years from the date of execution of the deed.

Also, the balance of the price has already become res judicata when the first case was dismissed,
which dismissal became final.

Legayada claims that his counsel wrote a letter to Catangcatang to inform her that the redemption
money was already in said counsel’s possession, which letter never reached Catangcatang and was
returned to the counsel since Catangcatang could not be found. But Legayada could have
deposited the amount of redemption with the court. It is not sufficient that the vendor a retro
manifests his desire to repurchase. This statement of intention must be accompanied with an
actual simultaneous tender of payment which constitutes the legal exercise of the right to
repurchase. While consignation is not necessary to allow repurchase, a mere tender being enough,
the tender does not relieve the vendor form 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 a retro is the
debtor and the vendee a retro as the creditor of the purchase price (Art. 1616). The vendor could
and should have exercised his right of redemption by filing a suit against the vendee and making
consignation with the court.

Thus, Catangcatang is entitled to consolidation of ownership.

Villarica v. CA, GR L-19196, November 29, 1968, Capistrano, J. (Right of redemption is one
which is reserved in the deed of sale, not in a subsequent instrument)
FACTS:
On May 19, 1951, Sps. Villarica sold to respondents Sps. Consunji a land for P35k. On May 25,
Sps. Consunji executed another instrument, granting Sps. Villarica an option to buy the property
within 1 year, which was extended for 1 month. In February 1953, Sps. Consunji sold to
respondent Francisco the land for P47k.

Sps. Villarica brought an action for reformation against respondents of the absolute sale into an
equitable mortgage. CFI held that there was equitable mortgage. CA reversed, finding that there
was a sale. Hence this petition.

Sps. Villarica claims that there is an equitable mortgage because: 1) the price of P35k was
unusually inadequate; 2) the vendors remained in possession of the property sold; 3) the 1-year
period for repurchase in the May 25 instrument was extended for 1 month, and 4) the vendors pay
the taxes on the land.
ISSUE:
Whether there was an equitable mortgage.
HELD: NO.
1) P35k is not even inadequate. Sps. Villarica purchased it for P20k. They borrowed money of
P7.4k from one Domingo Lam as part payment of the price. They mortgaged the land as security
for the P10k unpaid balance. 1 year later, they sold it to Sps. Consunji for P35k, making a profit
of P15k in one year without having invested their own money in buying the land. Thus, the P35k
stated in the instrument of absolute sale was the market price of the land in 1951.

2) The vendors did not remain in possession as lessees or otherwise. On their request in order to
help them in the expenses of their children in Manila, the vendors were merely allowed by the
vendees to collect the monthly rents of P300 for 5 months until Oct. 1951 to be charged against
them. Thereafter, the vendees were the ones who collected the rents.

3) The option granted to Sps. Villaricas to buy the property is different 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 Art. 1601 “Conventional redemption shall take place when the vendor reserves
the right to repurchase the thing sold xxx.” The right of repurchase is not a right granted the vendor
in a subsequent instrument but is a right reserved by the vendor in the same instrument of sale
as one of the stipulations of the contract. Once the instrument of absolute sale is executed, the
vendor can no longer reserve the right to repurchase, and any right granted thereafter cannot be a
right of repurchase but some other right like the option to buy here.

Thus, the deeds cannot evidence a contract of sale with pacto de retro and hence, the extension of
one month does not fall under Art. 1602 (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) The taxes paid by the vendors were back taxes up to the time of the sale on May 19, 1951. The
vendors had the obligation to pay the back taxes since they sold the land free of all liens and
encumbrances. The taxes due after the sale were paid by the vendees.

Diamante v. CA, GR 51824, February 07, 1992, Davide, Jr., J.

FACTS:
Diamante and Primitivo inherited a fishery lot which they divided, Diamante getting 4.4ha and
Primitivo 5ha. Primitivo sold his share to respondent Deypalubos.

Diamante sold to Deypalubos his leasehold rights over his property. Deypalubos executed in favor
of Diamante an option to repurchase within 10 years with a 10-year grace period. Deypalubos
filed an application with the Bureau of Fisheries (BOF) for a fishpond lease agreement (FLA). He
submitted the deed of sale, but he did not submit the option to repurchase. BOF issued to
Deypalubos FLA 1372.

Diamante sent a letter-complaint to nullify FLA 1372 to the BOF, claiming that he has a 20-year
option to repurchase. This was denied. On appeal to the Secretary of DANR, the FLA was
cancelled, saying that there was misrepresentation of an essential fact by Deypalubos since he did
not present the option to repurchase which the secretary considered an encumbrance and thus an
essential and material fact. CFI ruled for Deypalubos on certiorari. CA affirmed. Hence this
petition.

ISSUE:
Whether the cancellation of the FLA was proper.
HELD: NO.
The secretary erred in holding that Deypalubos’ non-disclosure of the option to repurchase
constituted a misrepresentation of an essential or material fact which, under S29 of the Fisheries
Administrative Order 60, shall cause cancellation of the lease. He was o the opinion that the option
was an encumbrance which affected the exclusive ownership of Deypalubos on the land sold to
him by Diamante. This is a misunderstanding of the law.

Art. 1601 provides xxx. In Villarica v. CA, SC held that the right of repurchase is a right reserved
by the vendor in the same instrument of sale as one of the stipulations of the contract. In an earlier
case, we held that 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 absolutely. If he afterwards grants the vendorthe right to repurchase, it is a new
contract entered into by the purchaser a absolute owner already of the object. In such case, the
vendor has not reserved the right to repurchase.

Thus, the option to repurchase executed by Deypalubos here is merely a promise to sell governed
by Art. 1479. There is no copy of the option attached to the records. Thus, We cannot properly
rule on whether the promise was accepted and if there was a consideration distinct from the price
to support the option. In the absence of both acceptance and separate consideration, the promise to
sell is not binding upon the promissor.

The contract of option is a separate contract from the contract which the parties may enter into
upon consummation of the option. A distinction should be drawn between the consideration for
the option to repurchase and the consideration for the contract of repurchase itself. Even if the
promise was accepted, Deypalubos was not bound in the absence of a distinct consideration.

Urbano et al. v. GSIS, GR 137904, October 19, 2001, Puno, J. (After expiration of redemption
period, allowing repurchase is at vendee’s option since the property is now his)
FACTS:
Petitioners mortgaged their property in QC to GSIS to secure a housing loan. They failed to pay
the loan. GSIS foreclosed on Oct. 28, 1983 and was the highest bidder. Petitioner Arnel Arrienda
wrote to GSIS signifying her intention to redeem the property on Sept. 26, 1984. GSIS allowed
them until Nov. 18, 1984 to redeem.

On Oct. 29, 1984, Urbano requested for more time. They were given 60 more days to pay P174k.
On July 06, 1985, GSIS granted petitioners 60 days from notice to purchase at P174k. Petitioners
were notified at Aug. 02, 1985. Unable to still raise the amount, Arrienda offered on Oct. 04, 1985
a downpayment of P50k to purchase the property, the balance of P124k to be paid in 5 years. GSIS
declined.
Arrienda wrote GSIS on Jan. 06, 1986, requesting a restructuring or a liberal arrangement to
purchase back the property. This was denied.

On august 11, 1987, GSIS approved the sale of the property to respondent Crispina dela Cruz for
P267k cash. A deed of absolute sale was executed by GSIS in favor of Cruz. Petitioners protested.
Petitioners filed a case in RTC for annulment of contract. RTC dismissed. CA affirmed. Hence
this petition for review.

ISSUE:
Whether petitioners have a right to repurchase the property.
HELD: NO.
Under PD 1146 or the Revised Government Insurance Act of 1977 as amended by PD 1981, the
Board of Trustees of GSIS has the power, nay, the responsibility, to exercise discretion in
determining the terms and conditions of financial accommodations to its members with the dual
purpose of making GSIS more responsive to the needs of its members and assuring the solvency
of GSIS’ fund. This discretion may be exercised in acquiring, using, or disposing real or personal
properties. Thus, the Board could exercise its discretion on whether to accept or reject
petitioners’ offer to repurchase the property taking into account its dual purpose.

Also, the Board’s exercise of discretion in case of repurchase is supported by jurisprudence. The
right to redeem becomes functus officio on the date of its expiry. Its exercise after the period is
not really one of redemption but a repurchase. Distinction must be made because redemption
is by force of law; the purchaser at public auction is bound to accept redemption. But repurchase
of foreclosed property after redemption period imposes no such obligation. After expiry, the
purchaser may or may not re-sell the property but no law will compel him to do so. He is not
bound by the bid price and may set a higher price for the property already belongs to him as
owner.

From the expiry date of redemption on Nov. 18, 1984, petitioners were given about 10 months
within which to repurchase the property for P174k. due to petitioners’ repeated failure to
repurchase coupled with their failure to pay rent on the property, the Board denied their subsequent
request to repurchase. GSIS manager even commented that petitioners were merely delaying the
final disposition of the property.

The denial was not based on whim or caprice, but on a factual assessment of the financial capacity
of petitioners to make good their repeated offers to repurchase. GSIS balanced between being
“responsive to the needs of GSIS members” and assuring the “actuarial solvency of the Fund
administered by GSIS” and tilted the scale in favor of the latter. This was within the powers of the
Board.

Thus, petitioners are not entitled to repurchase as a matter of right.

Legaspi v. CA, GR L-45510, May 27, 1986, Gutierrez, Jr., J.

FACTS:
Legaspi owns 2 lands which he sold to his son in law, respondent Leonardo Salcedo on Oct. 15m
1965 for P25k with right to repurchase within 5 years from execution of the deed of sale. Before
the expiry date of Oct. 15, 1970, Legaspi tendered P25k for the repurchase (on Oct. 14, 1970).
Salcedo refused, wanting Legaspi to pay an additional P17,250, saying that the value of the money
had been devalued, relying on Art. 1250 of NCC (extraordinary inflation). On Oct. 15, 1970,
Legaspi deposited in the office of the clerk of court of CFI Cavite the P25k as evidenced by an
Official Receipt. Legaspi filed an action for reconveyance to enforce his right to repurchase the 2
lands.

CFI ruled for Legaspi, finding that there was tender of payment before the expiration of the period
to redeem and that interest in the form of additional P17,250 has no place in the scheme of a sale
with right to repurchase. CA reversed, finding that there was no tender of payment or consignation.
Hence this petition by certiorari.

ISSUE:
Whether Legaspi was able to exercise his right to redeem before the expiration of the 5-year period
to do so.
HELD: YES.
Tender of payment is the manifestation of the debtor to the creditor of his desire to comply with
his obligation, wit hthe offer of immediate performance. In instances where no debt is due and
owing, consignation is not proper. Consignation is not required to preserve the right of
repurchase as a mere TENDER of payment is ENOUGH if made on time for an action to
compel the vendee a retro to resell. Thus, a showing that Legaspi made a valid tender is sufficient.
It is enough that a sincere or genuine tender and not a mock or deceptive one was made. That
Legaspi deposited the repurchase money with the clerk of court was simply an additional security
for him. It was not an essential act that had to be performed after tender of payment was refused
by Salcedo although it may serve to indicate the veracity of the desire to comply with the
obligation.

It was erroneous for CA to reverse the factual finding of CFI that a valid tender was seasonably
made. the finding was not grounded entirely on speculation or conjectures. CA found that there
was discrepancy as to the time the consignation was made- 10am or 3pm? But this is insubstantial.
There is an official receipt evidencing the transaction. An OR printed in accordance with the
standard forms required by the government is a public document. The evidentiary nature of public
documents must be sustained in the absence of strong, complete, and conclusive proof of its falsity
or nullity.

the records show that Legaspi tendered and offered personally the P25k on Oct. 14, 1970 to
Salcedo who refused to accept it saying it was devalued. Thus, there was proper exercise of the
right to repurchase.

EQUITABLE MORTGAGE
San Pedro v. Lee, GR 156522, May 28, 2004, Ynares-Santiago, J.
FACTS:
Petitioner Erlinda San Pedro filed a suit against Sps. Ruben Lee and Lilian Sison praying that the
document “Kasulatan ng Ganap na Bilihan ng Lupa” be declared an equitable mortgage and not a
sale and for the reconveyance of the property subject thereof. The said kasulatan states:
Na ako ang tunay at ganap na may-ari xxx sa isang lagay ng lupa xxx TCT T-290387 xxx.

Na dahil at alang-alang sa halagang ISANG DAAN AT LIMAMPUNG LIBONG PISO

(P150,000.00), xxx, ibinayad sa akin xxx ni Ruben T. Lee xxx aking ipinagbibili xxx ang
lahat at boo kong karapatan at pagmamay-ari at pamumusesyon sa nabanggit na lagay ng
lupa xxx.

San Pedro claims that she desperately needed money for her children’s college education and
approached one Philip dela Torre who introduced her to respondent Ruben Lee. She loaned P105k,
with P45k interest, for a total of P150k. As security, she mortgaged the land covered by TCT
290387. When she attempted to pay real property taxes, she was surprised to learn that title was
transferred to Lee already thru TCT 305595.

Respondents have a different story, claiming that the sale was brokered by Torre, their mutual
acquaintance. The price of P200k was reduced to P150k because the property had no existing right
of way and was prone to flooding. San Pedro accepted and agreed to sell the land.

Both parties presented various witnesses.

RTC ruled for San Pedro, ruling that the contract was a mortgage. CA reversed. Hence this petition.

ISSUE:
Whether the contract was proven by San Pedro to be an equitable mortgage.
HELD: NO.
The document appears on its face to be a contract of sale. San Pedro claims that it is a n equitable
mortgage. Art. 1602 provides:
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.
The requisites for an equitable mortgage are: 1) 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.

We find that there is a sale. Actori Incumbit Onus Probandi. Upon the plaintiff in a civil case, the
burden of proof never parts. Plaintiff must establish her case by a preponderance of evidence.
Here, San Pedro relies on pars. 1,2,5, and 6 of Art. 1602.
1) As to the alleged inadeauacy of price, San Pedro presented 2 witnesses as to the market values
of real estate in the locale. But the testimony of the purported broker Adela Ortega was not given
credence by CA because she failed to substantiate her allegation that the prevailing price of the
property at the time of sale was P60/m2. Her competence as an experienced real estate was also
questionable as she was not familiar with factors that affect the increase in value of realty or the
influence of zonal valuation made by the local government which are very basic to a real estate
broker. The second witness BIR Revenue Supervisor Juanito Angeles testified as to the market
value of properties on September 25, 1994, but he did not testify as to such value as of May 23,
1985, the date of the contract here.

Without evidence as to the market value of the locale as of date of the contract, it cannot be
concluded that the price of the sale at P8.7/m2 was grossly inadequate. Mere inadequacy is
insufficient. It must be grossly inadequate. The price of the property was P20/m2 in 1994, thus the
price of P8.7/m2 9 years earlier in 1985 is not grossly inadequate.

2) As to the alleged continuous possession, San Pedro presented Federico Santos who testified
that he is a farmer tilling the property owned by San Pedro to whom he has been paying lease
rentals. This testimony was offered to prove that he was the agricultural leasehold tenant of San
Pedro on the land.

But while Santos established that he was San Pedro’s tenant, the identity of the land which he tills
and that of the land subject of the complaint was not established. The land described in their
Kasunduan sa Buwisan was 1.5ha while the land subject of the contract here is 1.72ha. There is no
clear indicator that the land Santos tills is the land in question.

3) As to the 5th paragraph, San Pedro did not present proof that she, as vendor, bound herself to
pay taxes on the thing sold.

4) As to par. 6, respondents witnesses all testified as to the existence of a contract of sale. The
broker Torre and Atty. Roxas who notarized and prepared the contract in question were both
unequivocal as to the nature of the contract as a sale.

Respondents presented documentary evidence showing that the contract was really a sale: 1)
receipt for P150k dated May 23, 1985, issued by San Pedro, 2) authority to pay capital gains tax
by San Pedro to Ruben Lee, and 3) affidavit of non-tenancy by San Pedro.

Ceballos v. Intestate Estate of Mercado, GR 155856, May 28, 2004, Panganiban, J.

FACTS:
Leonora Ceballos owns a land in Cebu. She was introduced to Emigdio Mercado to obtain a loan.
Ceballos borrowed P12k. She mortgaged her land. Ceballos was unable to pay the debt. A deed of
absolute sale was executed in 1982 where the mortgaged property was sold to Mercado for
P16,500. This was signed by Leonora Ceballos and her husband Narciso Ceballos, and notarized
by Atty. Ortiz. Ceballos. In 1990, Ceballos offered to buy back the property for P30k, but
Mercado’s wife Teresita refused as the title was already transferred in their names.
Ceballos thus filed suit against respondents. She claims that her and her husband’s signatures on
the deed of sale were forged. She sought the assistance of the PNP which found the sale a forgery.

CA found that the allegation of forgery was not proven. There is no reason to consider the
transaction as equitable mortgage. It granted moral damages because Ceballos imputed to the
deceased acts of forgery and fraud, tending to blacken his memory. Hence this petition.

ISSUE:
Whether the sale was an equitable mortgage.
HELD: NO.
1) The lower courts had sufficient factual basis in holding that the signatures of Ceballos and her
husband were not fogeries. Although there were dissimilatiries between the questioned and
standard signatures, the CA found striking similarities. The dissimilarities are overshadowed by
the similarities. Expert opinions are not conclusive in that they are generally regarded as purely
advisory. The courts may reject it if they find it inconsistent with the facts.

RTC, as CA affirmed, found that the expert witness only relied on the dissimilarities but ignored
the striking similarities.

2) Ceballos claims that the contract should be declared an equitable mortgage because the original
transaction was a loan and the price of P16.5k was ridiculously low. Art. 1602 and 1604 provide:
Art. 1602 xxx
Art. 1604: The provisions of Article 1602 shall also apply to a contract purporting to be an
absolute sale.
There is none of the circumstances in Art. 1602.

Concededly, the original transaction was a loan. But Ceballos had the burden of proving that she
did not intend to sell the property, that Mercado did not intend to buy it, and that the new agreement
did not embody the true intention of the parties.

While the property is now located in a tourist area and golf haven in Cebu and might be now (1990)
worth P10M as she claims, she 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. At the time of the sale,
the area was still undeveloped. Thus, the claim that the price was unconscionably low lacks
sufficient substantiation.

Ceballos also argues that Mercado’s delay in registering the deed of absolute sale shows that the
agreement was an equitable mortgage. But delay in transferring title is not one of the instances
enumerated by law in which an equitable mortgage can be presumed.

As a public document, the deed of absolute sale has in its favor the presumption of regularity. To
contradict it, one must present clear and convincing evidence.

3) The award of moral damages is wrong as respondents failed to show that Ceballos was
motivated by bad faith when she instituted the action for declaration of nullity of the deed. She
does not impute the authorship of the alleged forgery to Mercado, just that her signature was
forged.

Balatero v. IAC, GR 73889, September 30, 1987, Gutierrez, Jr., J.

FACTS:
The Director of Lands initiated court proceedings to adjudicate the rightful claimants of Lot 433,
later resurveyed into Lots 433-A and B. The claimants are petitioners Balatero and Josefa Iglupas
Badelles (substituted by her heirs), respondents Veloso, and Anacleto Iglupas.

The property was originally owned by the parents of Josefa Iglupas and her brother Alejo. The
land was given to Alejo and his wife Tomasa after the parents’ deaths. When Alejo died, Tomasa
sold the property to Josefa for P111 in 1918. Josefa and her children occupied the lot and old house
thereon. In 1930, Josefa, to secure a loan of P68, mortgaged the property toVeloso denominated
as “Pacto de Retro Sale.” This loan was paid P100 by Josefa and P300 by Balatero. Josefa had
occupied the lot from 1918 until her death in 1967.

RTC ruled that Lot 433-A belonged to Balatero while heirs of Josefa Badelles owned Lot 433-B.
It found that Veloso never possessed the land. IAC reversed. Hence this petition.

ISSUE:
Whether the 1930 document denominated as “Pacto de Retro Sale” was an equitable mortgage.
HELD: YES.
1) Art. 1602 provides xxx. IAC declined to apply Art. 1602 as it is a new provision in the NCC
not found in the Old Civil Code. But this applies to cases arising prior to NCC. Being REMEDIAL
in nature, Art. 1602 may be applied retroactively to cases arising prior to the effectivity of
NCC.

2) The Pacto de Retro sale provides:

That for and in consideration of the sum of P68.00, the receipt whereof is by these presents
acknowledged, the party of the First Part sells, cedes and transfers the property above
described to the party of the second part (now Veloso), his heirs and assigns, xxx.
"That the party of the first part (now Iglupas) by these presents reserves for herself, her
heirs and assigns, the right to repurchase said property during the period of four (4) months
xxx.

In interpreting contracts, when the words appear contrary to the evident intent of the parties, the
latter shall prevail (Art. 1370). On its face, the contract shows that the land was transferred to
Veloso thru pacto de retro. But there are circumstances that indicate that it is an equitable
mortgage.

a) The land remained undisturbed in the possession of vendor Josefa even after execution of the
contract. If Josefa really executed a sale to Veloso, the land should have been delivered to Veloso
and he would have taken immediate possession. Josefa paid the taxes due on the property,
mortgaged it to PNB, and exercised acts of ownership during the priod when it was supposed to
have already been sold.
b) The price of P68 in 1930 is unusually inadequate. This is supported by the fact that Josefa
bought the land 12 years earlier in 1918 for P111. Why should Josefa sell the land at almost half
of what she paid for it? The value of real property appreciates thru the years and not otherwise.

That 4 years after the contract or on 1934 Veloso executed an affidavit to “consolidate his right of
ownership” over the land is of no consequence. Only Possession acquired and enjoyed in the
concept of owner can serve as title for acquiring dominion (Art. 540).

Lacorte v. CA, GR 124574, February 02, 1998, Regalado, J.

FACTS:
Petitioners Simon, Rosario, Severino, Jerosalina, and Cirila, all Lacorte, and respondents Sps.
Peregrino and Adela Lacorte are the heirs of Maria Lacorte. Maria owned a land in Aklan. This
was foreclosed by the Rural Bank of Malinao which, after consolidating its ownership, sold the
property to respondenet Jose Icaca.

On Oct. 17, 1983, Icaca and Simon, in behalf of the other heirs, entered into an Agreement where
Icaca was authorized to purchase the property from the bank provided that the heirs of Maria shall
be given the right to repurchase it for P33,090 within 1 year. This period was extended until
March 1987 pursunat to another agreement on Oct. 16, 1984. On Nov. 4, 1984, Adela paid Icaca
P26k as deposit for the repurchase. She asked for P7,090 from the petitioners but got mad that they
had no money, so she went to pay the P26k alone.

Without the knowledge and consent of petitioners, Peregrino and Adela purchased the land by
virtue of a deed of reconveyance executed by Icaca on February 03, 1987.

Petitioners filed an action for annulment of contract, claiming prejudice. Icaca claims that he sold
the property to respondents in the honest belief that the spouses were acting for all the heirs and
thus he acquiesces to the annulment. RTC ordered the rescission of the conveyance and ordered
Icaca to sell the land to all the heirs petitioners and respondent spouses. CA reversed, saying that
petitioners have no cause of action since they are not parties to the deed of reconveyance or to the
sale between the bank and Icaca. Hence this petition.

ISSUE:
Whether petitioners are entitled to bring an action for annulment or rescission of the deed of
reconveyance between Sps. Peregrino and Adela Lacorte and Icaca.
HELD: YES.

The Oct. 17, 1983 Agreement provides:

That with the consent of the said Simon Lacorte and his co-heirs, I (*Icaca) have been
authorized directly to purchase their foreclosed land which was mortgaged to the Rural
Bank of Malinao, Aklan;
That we further agreed that within the period of one year beginning this date October 17,
1983, I am giving them the chance and privilege to recover and repurchase the said land in
the purchase (illegible) of (P21,500.00) plus (P12,090.00) PESOS of their recent mortgage
debt amounting in total of THIRTY THREE THOUSAND (P33,090.00) PESOS.
A contract is presumed to be an equitable mortgage when the vendor remains in possession as
lessee or otherwise, or when upon or after expiration of the right to repurchase another instrument
extending the period of redemption or granting a new period is executed.

Here, Maria and petitioners Rosario and Jerosalina remained in possession of the property despite
the existence of the Agreement and continue to do so now. Also, the Agreement was extended in
the second agreement of Oct. 16, 1984.

That the contract is an equitable mortgage is also evident from the words “of their recent
mortgage debt.” Apparently, there was an earlier mortgage by Maria to Icaca.

Also, in the “deed of reconveyance,” Icaca bound himself to “transfer, deliver, and reconvey” the
land. “Reconvey” means to convey back, to transfer back to a former owner. “Reconveyance” is a
transfer of realty back to the original or former grantor. Such agreements may be in the nature of
a contract of sale with a right of repurchase or an equitable mortgage. A contract of
reconveyance is but a necessary consequence of the exercise of a party’s right to repurchase the
property subject of a contract of sale with right of repurchase or of an equitable mortgage. This
attribute of a deed of reconveyance gives more weight that the Oct. 17, 1983 Agreement is a
contract of equitable mortgage.

Since Simon Lacorte executed the Agreement with Icaca for the benefit of all the heirs, any
payment by one or some heirs will inure to the benefit of all heirs. This notwithstanding,
respondents deny knowledge of the Oct. 17, 1983 Agreement. But this denial is specious. Adela
claimed that she informed petitioners about the P26k she paid to Icaca so that they would help her
raise the money to pay the balance. Thus, why would she still ask for money from them if the P26k
was supposed to be for the respondent spouses exclusively? When thru petitioners’ efforts, the
redemption price from the bank was reduced form P45k to P21k, respondents spouses started to
cooperate and took interest. Thus, they were aware of the dealings made by petitioners with the
bank and Icaca for the redemption, otherwise, they could not have known about the particulars
thereof.

Thus, it was the intention of the parties that the land be reconveyed to all the heirs. Thus, Adela’s
payment should inure to the benefit of all the heirs. Under Art. 1359, where there was a meeting
of the minds btu the true intention is not expressed in the instrument by reason of mistake, fraud,
inequitable conduct, or accident, one of the parties may ask for reformation. Since petitioners
should in truth be parties to the deed of reconveyance, they are entitled to the reformation to reflect
the true intention of the parties.

Petitioners need merely contribute pro rata to the payments.

Camus v. CA, GR 102314, May 26, 1993, Melo, J.

FACTS:
Camus and respondent David, thru David Motors and Marketing Corporation, executed a deed of
absolute sale of real property over a land. Camus filed this complaint to annul the deed of sale
claiming that it was intended as an equitable mortgage.
Camus testimony consisted of the following:
The land was previously mortgaged to Dimafelis. Before the mortgage matured, she had to look
for other sources from whom to borrow money to liquidate the mortgage. She was introduced by
Gula to David who was engaged in the business of giving loans.

Camus badly needed the obligation. She went to see David on May 9, 1986 with her
businesswoman daughter Paz Camus and Gula. Camus’ obligation to Dimafelis was P109k. She
borrowed P150k from David. David asked what collateral Camus was willing to offer, and Camus
offered the land. David inspected the land. They met again on May 15, 1986 after the inspection
with Gula and Paz. David told Camus that he will give the loan money provided that Camus
execute a deed of sale for P150k. Camus was reluctant. David said it was his policy. The interest
was at 10% monthly. Repayment was at 2 years with 1mo grace. Camus agreed because she badly
needed the money. David told her that he will not register the document unless Camus fails to pay.
Camus signed the deed of sale.

Camus fetched Dimafelis to David’s office in May 19, 1986. David asked for the title from
Dimafelis who gave the title to David. David prepared the check for Dimafelis for P109k. Camus
was given P1k in cash. The balance of P40k, said David, will be used for documentation (P10k)
and 2 months advance interest.

Camus says that they intended only a loan and not a sale.

This testimony was corroborated by Camus’ daughter.

ISSUE:
Whether an equitable mortgaged was proven.
HELD: YES.
Of significance to the issue here are the contemporaneous and subsequent acts of the contracting
parties which have been translated into testimonial evidence. This specie of evidentiary proof,
known as Parol Evidence Rule, spells the difference between success and failure of this petition.

On the other end of this controversy is David’s indifference throughout his comment and
memorandum as to the clarification made by Camus and her daughter, which nonchalant attitude
leads to the conclusion that Camus had established her onus probandi by a preponderance of
evidence and that David failed to prove his positive allegations.

Apart from this, David’s retaining of a portion of the price as advance interest is the very
circumstance in Art. 1602 (4) of NCC. Camus received only P1k out of the P150k alleged
consideration for the “sale”. This is another circumstance showing that the entire transaction was
but a loan accommodation since no seller in her right senses will part with her treasured
possession via a tedious process only to end up with a small sum of money as consideration.

There is no doubt that Camus agreed to the execution of the so-called “sale” to David because of
the URGENT NECESSITY for money to liquidate her debt to Dimafelis. This is another
circumstance where it may be fairly inferred that the real intention of the parties is to secure
a debt or the performance of any other obligation (Art. 1602(6) ).
Dapiton v. CA, GR 107259, June 09, 1997, Hermosisima, Jr., J.
FACTS:
Raymundo Dapitan, now dead, filed a complaint for annulment of deed of sale against Peña in
RTC. According to petitioners, in May 05, 1967, Raymundo Dapiton, father of petitioners heirs,
obtained a P400 loan offering as security his house and lot in Leyte worth P3,000 from respondent
Peña.

The document covering the transaction purports to be a deed of sale. Petitioners claim that the
transaction between Dapiton and respondent was an equitable mortgage.

Peña claims that it was an absolute sale. He says that he only made the annotations on the left and
back of the deed of sale to appease the children of Raymundo Dapiton and that these had no
considerations. Said annotations state:

(Left): “This is to certify that Raymundo Dapiton has one year to repurchase the property
subject of this contract.”
(Back): “This is to inform anyone that Raymundo Dapiton will have 1 year to repurchase
xxx.”
Peña cancelled the tax declaration in Raymundo’s name and obtained a Tax Dec. 4101 in his name.
he paid the realty taxes on the house and lot.

Raymundo Dapiton had sent P400 to Peña in May 03, 1968 as full satisfaction of the redemption.
But Peña rejected the redemption saying that they executed an absolute sale. Raymundo also
entered into similar transactions in 1962, 1964, 1968 involving his house and lot, and the amount
involved remained P400 also. Raymundo possessed the land until he died. His children, petitioners
now, remain in possession.

RTC ruled that there was a sale. CA also found that there was a sale and the annotations were mere
promises to sell which is void because there was no price stated and no consideration. Hence this
petition.

ISSUE:
Whether the contract was an equitable mortgage.
HELD: YES.
Art. 1602 states xxx.

1) Peña made 2 annotations granting the right to repurchase within 1 year. This is a clear
contravention of Peña claim that the deed of sale was meant to be absolute.

2) Raymundo habitually borrowed money from numerous acquaintances using the said property
as security for the loan all for P400. Although these were constantly denoted as “sale with right of
repurchase”, Raymundo continuously remained in possession of the property. thus, all these were
equitable mortgages.
3) We find it difficult to believe that Peña would tolerate the uninterrupted occupation of the
property by the Dapitons simply because he has no need for it just yet. Peña has been in dispute
with the Dapitons since 1968 and considering his claim of ownership, he let Dapiton and his heirs
remain and make use of the property for almost 30 years. Although the tax declarations have
been transferred to Peña’s name and he has been continuously paying the realty taxes, he has made
no move to oust petitioners from possession. This circumstance falls within Art. 1602.

4) Peña is a member of the bar. It is improbable that he would agree to add the annotations only to
appease Raymundo’s children. That he would place such annotations that put in question the
absoluteness of the sale raises doubts as to the true nature of the transaction. After all, if the
property was truly his, no amount of objections by the children would change the fact that the sale
is already fait accompli.

5) Art. 1603 provides :

"Article 1603. In case of doubt, a contract purporting to be a sale with right to repurchase
shall be construed as an equitable mortgage."
Considering the circumstances here, we resolve the doubt in favor of petitioner.

Sps. Gallent v. Velasquez, GR 203949, April 06, 2016, Reyes, J.

FACTS:
Sps. Gallent was the registered owner of a residential property in Muntinlupa with a house and
pool. They mortgaged the property to Allied Banking as security for a loan of P1.5M. They failed
to pay the loan which had ballooned to P4.6M. Allied extrajudicially foreclosed the mortgaged
property. It was the highest bidder. Sps. Gallent failed to redeem after 1 year, so Allied
consolidated ownership.

Allied agreed to sell back the property to Sps. Gallent for P4M as shown by an Agreement to Sell.
Sps. Gallent made a down payment of P3.5M and the balance was payable in 12 monthly
amortizations. Sps. Gallent were allowed to keep possession. They paid a total of P3,790,500.
They then sought the help of a close family friend, respondent Velasquez. As inducement, they
agreed that Velasquez would have the property registered under his name until he is repaid. Thus,
they executed a deed of assignment of rights, assigining to Velasquez all their rights/obligations
under the agreement to sell with Allied. Velasquez paid the balance of P216k to allied.

Allied and Velasquez executed a deed of absolute sale for P4M. Title was issued to Velasquez.

4 years later, Velasquez demanded that Sps. Gallent vacate, but they refused. Velasquez filed an
ex parte petition for issuance of a writ of possession. Sps. Gallent filed consolidated motions to
intervene and dismiss, which was denied. This was appealed to CA 4th division. RTC eventually
granted the writ of possession. This was appealed to CA 10th division.

CA 10th division ruled that since Allied, the mortgagee-purchaser, is entitled to an ex parte writ of
possession since title has been consolidated in its name, Velasquez as transferee is also entitled.
Hence this petition by Sps. Gallent.
CA 4th division held that the writ of possession cannot issue since Sps. Gallent are adverse
claimants in actual possession. Hence this petition by Velasquez.

ISSUE:
Whether Velasquez is entitled to an ex parte writ of possession.
HELD: NO.
1) Generally, a purchaser in an extrajudicial foreclosure of real property becomes the absolute
owner if no redemption is made within 1 year from registration of the certificate of sale. He is
entitled as such owner to all rights of ownership in Art. 428, including jus possidendi. This is why
S7, Act 3135 imposes upon RTC a ministerial duty to issue a writ of possession to the new owner
upon a mere ex parte motion. There is no need for an ordinary action to gain possession by a
purchaser at an extrajudicial foreclosure of real property. The basis of this right to possess is the
purchaser’s ownership of the property. Not even a pending action to annul the mortgage or the
foreclosure sale will by itself stay the issuance of the writ of possession.

2) When the thing purchased at a foreclosure sale is in turn sold or transferred, the right to the
possession thereof, along with all other rights of ownership, follows the thing sold to its new
owner.

3) As exception, the ministerial duty of the court to issue ex parte a writ of possession ceases once
it appears that a third party, not the debtor mortgagor, is in possession of the property under
a claim of title adverse to that of the applicant. Under S33, Rule 39, RoC, the possession of the
property shall be given to the purchaser or last redemptioner unless a third party is actually
holding the property adversely to the judgment debtor. This applies to extrajudicial foreclosure
sales pursuant to S6 of Act 3135. The third person must not only possess, but he must have a claim
adverse to the debtor/mortgagor. To be considered in adverse possession, the third party possessor
must possess in his own right and not merely as successor or transferee of the debtor or
mortgagor.

4) As to the deed of assignment to Velasquez, Sps. Gallent may be considered adverse possessors
in their own right, the said agreement being in essence an equitable mortgage.

Sps. Gallent claims that their agreement with Velasquez was an equitable mortgage and not an
assignment of their interest in the property. in determining the nature of a contract, the court is not
bound by the name it is given by the parties but by their intention shown by their conduct, words,
actions, and deeds prior to, during, and immediately after executing the agreement.

The substantial payment for the repurchase from Allied of P3,790,500 out of the P4M entitles
Sps. Gallent to the legal presumption that their assignment to Velasquez was an equitable
mortgage. In a contract of mortgage, the mortgagor retains possession of the property given as
security. By the clear dictate of equity, when the vendor retains possession as lessee or otherwise,
or the price is unusually inadequate as in this case, the law deems the contract an equitable
mortgage.

After the payment of P216k by Velasquez, the next step would have been for Allied to execute the
sale to Sps. Gallent. But they assured Velasquez that he could keep the title until he is repaid. Thus,
they executed a deed of assignment to enable Allied to transfer title directly to Velasquez, since
a transfer first to Sps. Gallent and then a sale or assignment to Velasquez would have entailed
paying capital gains and documentary stamp taxes twice, along with transfer fees. It was also
agreed with Velasquez that Sps. Gallent could remain in the property not just as lessees but as
owners-mortgagors.

This controversy can no longer be considered an offshoot of the extrajudicial foreclosure

involving Allied, but rather it is the result of a subsequent personal transaction between Sps.
Gallent and Velasquez which they called an assignment, but which the law recognizes as an
equitable mortgage. The contending parties in Velasquez’s ex parte motion for writ of possession
is now Velasquez and Sps. Gallent. The latter have a superior right to retain possession.

Heirs of Jose Reyes, Jr. v. Amanda Reyes, GR 158377, August 04, 2010, Bersamin, J.
FACTS:
Antonio and Leoncia Reyes owned a land in Bulacan. They had 4 children: Jose Sr., Teofilo, Jose
Jr., and Potenciana. Antonio died intestate. Potenciana predeceased Antonio. Jose Jr. and Teofilo
resided on the property.

On July 9, 1955, Leoncia and her 3 sons executed a Kasulatan ng Biling Mabibiling Muli where
they sold the land and improvements to Sps. Francia for P500, subject to repurchase “sa oras na
sila’y makinabang”. Teofilo and Jose Jr. and their families remained in possession and paid the
realty taxes thereon. Leoncio and her children did not repay the P500.

Alejandro, son of Jose Sr., paid the P500. On August 11, 1970, heirs of Sps. Francia executed a
“Pagsasaayos ng Pagaari at Pagsasalin” where they conveyed to Alejandro all their rights in the
property for P500. On August 21, 1970, Alejandro executed a “Kasulatan ng Pagmeme-ari”. A
tax declaration was issued to Alejandro and he paid its realty taxes.

On Oct. 17, 1970, Alejandro, Leoncia, Jose Sr. executed a Magkakalakip na Salaysay, by which
Alejandro acknowledged the right of Leoncia, Jose Sr., Jose Jr. to repurchase the property “at any
time” for P500.

Later, even after Leoncia’s death, Jose Sr., Teofilo and their respective families continued residing
in the property. All of Leoncia’s sons later also died, survived by their respective heirs (of Teofilo,
Jose Jr., Jose Sr.). Alejandro died also. He was survived by his wife Amanda Reyes and children,
respondents herein.

Amanda asked heirs of Teofilo and Jose Jr. to vacate because she and her children needed the
property. Petitioners refused to comply. Respondents filed a suit for quieting of title and
reconveyance in RTC.

Respondents allege that their predecessor Alejandro had acquired ownership from the Pagsasaayos
ng Pagaari on Aug. 11, 1970 executed by the heirs of Sps. Francia. Alejandro consolidated
ownership via his Kasulatan ng Pagmeme-ari. Under the Magkasanib na Salaysay, Alejandro
granted to Leoncia, Jose Sr., Teofilo and Jose Jr. the right to repurchase but they failed to do so.
Petitioners claim that the Kasulatan ng Biling Mabibiling Muli was an equitable mortgage, not
pacto de retro sale. Thus, the mortgagors retained ownership and Sps. Francia’s heirs could not
have sold the property to Alejandro.

RTC ruled for respondents, ruling that Alejandro acquired ownership due to petitioners’
predecessors failure to repurchase. CA ruled that the transaction was an equitable mortgage. But
since petitioners failed to file an action for reformation of the Kasulatan ng Biling Mabibiling Muli
within 10 years from the deed’s execution, pursuant to Art. 1144, they are already barred from
claiming that the transaction was an equitable mortgage. Hence this petition.

ISSUE:
Whether the Kasulatan ng Biling Mabibiling Muli was an equitable mortgage.
HELD: YES.
1) The purported vendors had continued in possession o the property even after the agreement.
The property remained declared for taxation under the name of Leoncia with the realty taxes being
paid by her. Such falls under Art. 1602 pars. 2 and 5.

2) Petitioners claim that if prescription must apply to them, it should also apply to respondents
who failed to enforce their right under the equitable mortgage within 10 years from July 9,
1955. We agree. Considering that “sa oras na sila’y makinabang”, the period of redemption, had
no definite period, the period to redeem should be ten years from execution of the contract
pursuant to Arts. 1142 and 1144 of NCC. Upon the expiration of the 10-year period, mortgagees
Sps. Francia or their heirs should have foreclosed the mortgage, but they did not. Instead, they
accepted Alejandro’s payments until the debt was fully satisfied by August 11, 1970. This
acceptance beyond the 10-year period of redemption estopped mortgagees’ heirs from insisting
that the period to redeem had already expired. Their actions impliedly recognized the continued
existence of the equitable mortgage.

3) When Alejandro redeemed the property on Aug. 11, 1970, he did not become a co-owner
because his father Jose Sr. was still then alive. He merely became an assignee of the mortgage
and the property continued to be co-owned by Leoncia and her sons Jose Sr. Jr. and Teofilo. He
acquired only the rights of his assignors and nothing more.

4) The failure to initiate an action for reformation within 10 years from executiong of Kasulatan
ng Biling did not bar petitioners from insisting their rights on the property. the parties to the
Kasulatan abided by their true agreement under the deed, to the extent that they and their
successors-in-interest still deemed the agreement an equitable mortgage even after 15 years form
the purported pacto de retro sale. Thus, an action for reformation is superfluous since its reason is
to ensure that the parties abide by their true intended agreement.

The Kasulatan ng Pagmeme-ari by Alejandro was ineffectual since he is merely an assignee of

the mortgage. His being an assignee of the mortgage authorize him or his heirs to appropriate for
himself without violating the prohibition against pactum commisorium in Art. 2088. As
mortgagee, it is his duty to foreclose the mortgage if he wishes to secure a perfect title to the
mortgaged property.
5) Respondents claim that the Magkasanib na Salaysay was void. Petitioners could no longer
claim to be co-owners since the co-ownership had ended by Alejandro’s repudiation thereof. Such
acts of repudiation are claimed to be 1) redeeming the property from Sps. Francia, 2) executing
an affidavit of consolidation of ownership (Kasulatan ng Pagmeme-ari), 3) acquiring a new tax
declaration in his name etc.

The Lower Courts also held that the Magkasanib was inefficacious since when it extended the
redemption period, it was already expired.

Art. 1602 provides in par. 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; thus, the law
allows a new period of redemption to be granted even after the expiration of the equitable
mortgagor’s right to repurchase. Thus, the Magkasanib effectively afforded to Leoncia, Teofilo,
Jose Sr. and Jose Jr. a fresh period to pay Alejandro the P500.

As to repudiation, the elements are:

1) The co-owner has performed unequivocal acts of repudiation, 2) Such positive acts have been
made known to the cestui que trust or the other co-owners, 3) the evidence on repudiation is clear
and conclusive, and 4) His possession is open, continuous, exclusive, and notorious.

These elements were not established. Alejandro only possessed a portion of the property as the
other co-owners continued to possess it. The sole fact of cancellation of the tax declaration in
Leoncia’s name and issuance of a new one in Alejandro’s name and his payment of the realty tax
is not an unequivocal act of repudiation.

Respondents can thus only demand from petitioners the partition of the co-owned property and the
reimbursement of the amount advanced by Alejandro to repay the obligation. They may also seek
proportional reimbursement of realty taxes paid pursuant to Art. 488 of NCC. They, in the
alternative, may opt to foreclose the equitable mortgage since petitioners’ period to redeem, 10
years from execution of the Magkakasanib na Salaysay on Oct. 17, 1970, had already long lapsed.

LEGAL REDEMPTION
Carlos Alonzo v. IAC, GR L-72873, May 28, 1987, Cruz, J.
FACTS:
Five siblings inherited equal pro indiviso shares of a land. One of them, Celestino Padua,
transferred his undivided share to petitioners Alonzos for P550 thru absolute sale on March 15,
1963. 1 year later, Eustaquia Padua, his sister, also sold her own share to petitioners for P440.
Petitioners occupied after the sales 2/5 of the area of the lot and enclosed it with a fence.

Tecla Padua lived on the same lot. Eustaquia stayed in the same house with her sister Tecla.
Petitioners and private respondents were close friends and neighbors.

On May 27, 1977, Tecla Padua filed a complaint for redemption. RTC dismissed the complaint on
the ground that the right had lapsed, not having been exercised within 30 days from notice of the
sales in 1963 and 1964. Although there was no written notice, they had actual knowledge. IAC
reversed, ruling that written notice is required under Art. 1623. Hence this petition.
ISSUE:
Whether the redemption should be granted.
HELD: NO.
Art. 1088 provides:
"Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the
partition, any or all of the co-heirs may be subrogated to the rights of the purchaser by
reimbursing him for the price of the sale, provided they do so within the period of one
month from the time they were notified in writing of the sale by the vendor."
Art. 1623 provides:
"Art. 1623. The right of legal preemption or redemption shall not be exercised except
within thirty days from the notice in writing by the prospective vendor, or by the vendors,
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.
"The right of redemption of co-owners excludes that of the adjoining owners."
Thus, the legislature deliberately selected a particular method of giving notice in Art. 1623, and
that notice must be deemed exclusive. The notice must be in writing and given by the vendor.

Here, there was really no written notice given by the vendors to their co-heirs. Strictly applied,
Art. 1088 would lead to the conclusion that the 30-day redemption period had not begun to run.
But we presume the good motives of the legislature is to render justice. There are some laws
that, while generally valid, may seem arbitrary when applied in a particular case because of its
peculiar circumstances. In such situation, we are not bound to apply them in slavish obedience
to their language. The spirit rather than the letter of a statute determines its construction.

In requiring written notice, Art. 1088 seeks to ensure that the redemptioner is property notified of
the sale and to indicate the date of such notice as the starting time of the 30-day period of
redemption.

But we cannot accept the respondents’ pretense that they were unaware of the sales made by
Celestino and Eustaquia. The purpose is clear: to make sure that the redemptioners are duly
notified. We are satisfied that here, the other heirs were actually informed, although not in
writing, of the sales in 1963 and 1964 and that such notice was sufficient.

The 30-day period began sometime between 1963 and 1964, and 1976 when the co-heirs were
actually informed of the sale. This could have happened any time during the 13 years. Thus, when
Tecla in 1977 filed her complaint, the right of redemption had already been extinguished or
expired.

It would be perfectly natural for the co-heirs to wonder why the Sps. Alonzo, who were not
among them, should enclose a portion of the inherited lot and build thereon a house. This
was not the act of a temporary possessor or a mere mortgagee but an act of ownership. But the co-
heirs did not see fit to object or at least inquire to ascertain the facts.
We are not abandoning the De Conejero and Butte doctrines but are merely adopting an exception
to the general rule in view of the peculiar circumstances of this case.

Lee Chuy Realty Corporation v. CA, GR 104114, December 04, 1995, Bellosillo, J.
FACTS:
A land in Meycauayan Bulacan was originally co-owned by Ruben Jacinto with 1/6 and
Dominador, Arsenio, Liwayway all Bascara, and Ernesto Jacinto who owned the remaining 5/6.
Ruben sold his 1/6 to Lee Chuy Realty. The Bascaras and Ernesto sold the 5/6 to Marc Realty.

Lee Chuy claims that it was never informed of the sale to Marc Realty. It filed a complaint for
legal redemption against Marc Realty and consigned in court a manager’s check for P614k. Marc
Realty insisted that the complaint be dismissed for lack of cause of action since there was no prior
valid tender of payment nor prior notice of consignation.

Trial court ruled that the action itself is equivalent to a formal offer to redeem so there is no need
for a prior tender and consignation. CA reversed, saying that prior tender or offer of redemption is
needed before filing an action for legal redemption. Hence this petition.

ISSUE:
Whether a prior tender of payment is needed before filing an action for legal redemption.
HELD: NO.
1) Art. 1620 provides:
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.
Art. 1623 provides xxx. In Tolentino v. CA, Tioseco v. CA, and Belisario v. IAC, we adopted the
view that a formal offer to redeem accompanied by a tender of the redemption price is not essential
where the right to redeem is exercised thru a judicial action within the redemption period and
simultaneously depositing the redemption price. The formal offer to redeem with a tender of the
redemption price is essential only to preserve the right of redemption for future enforcement
even beyond the redemption period. The filing of the action itself within the period is
equivalent to a formal offer to redeem. The formal offer to redeem is not a distinct step or
condition sine qua non before filing an action to exercise legal redemption.

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

2) The doctrine in Tolentino, Tioseco, and Belisario was disregarded by CA because they did not
involve legal redemption by a co-owner but by a mortgagor. But the law does not distinguish;
neither should we. Public policy favors redemption regardless of whether the redemptioner is a co-
owner or mortgagor, although perhaps with unequal force since each is given a different period. A
co-owner has 30 days from notice of the sale to avail of the right to redeem. Under the free patent
or homestead provisions of the Public Land Act, a period of 5 years from the date of conveyance
is provided. Under Act 3135, the redemption of extrajudicially foreclosed properties is exercisable
within 1 year from the date of the auction sale.

Gregorio v. Crisologo Vda. de Culig, GR 180559, January 20, 2016, Jardeleza, J.

FACTS:
Maria Crisologo Vda. de Culig is the widow of Alfredo Culig. During his lifetime, Alfredo was
granted a homestead patent under CA 141 over a property in North Cotabato. Alfredo died. on
Oct. 9, 1974, his heirs, including Crisologo, executed an extra-judicial settlement of estate with
simultaneous sale of the property to Sps. Andres Seguritan and Anecita Gregorio. The property
was sold for P25k.

On September 26, 1979, within the 5-year period to redeem in CA 141, Crisologo filed a
complaint demanding repurchase under CA 141, alleging that she approached the spouses and
offered to repurchase the property, but the spouses refused.

Spouses Seguritan claims that Crisologo had no right to repurchase since she only wanted to
redeem to sell it for greater profit. Seguritan died and was substituted by Anecita Grerorio as
petitioner.

RTC dismissed the complaint, saying that formal offer is not sufficient and must be accompanied
with consignation of the repurchase price if repurchase was refused. CA reversed, saying that
consignation is not necessary. Gregorio filed her MR in CA 7 months late and it was denied. Hence
this petition.

ISSUE:
Whether Gregorio must allow the repurchase of the property.
HELD: YES.
1) S119 of CA 141 provides that every conveyance of land acquired under the free patent or
homestead provisions shall be subject to repurchase by the applicant, his widow, or legal heirs
within 5 years from the conveyance. The complaint to repurchase here was filed within 5 years.
The parties agree that there was no consignment.

Gregorio claims that consignment is needed. This is untenable. Tender of the price or consignation
in court is not necessary where the filing of the action itself is equivalent to a formal offer to
redeem. The filing of the action itself is equivalent to a formal offer to redeem. Tender is not
necessary for redemption under CA 141 or Public Land Act.

2) Art. 1616 of NCC does not apply. This speaks only of the amount to be tendered but not the
procedure to be followed in exercising the right. In fact, in Peralta v. Alipio, we rejected the
argument that the provisions on conventional redemption apply as supplementary law to CA 141.

In Lee v. CA, we held that the mere sending of letters demanding repurchase within the 5-year
period was not sufficient exercise of the right to redeem and will not preserve the right to redeem.
But here, the complaint was filed within 5 years.
3) Gregorio claims that even if redemption was timely made, Crisologo is not entitled because she
intends to resell the property for profit and purely for speculation. Indeed, the main purpose of
granting a free or homestead patent is to preserve in the family of the homesteader the public land
granted so that he and his family may have a place to live and become a useful member of society.
If the purpose of repurchase of a patentee is to dispose of it again for greater profit, the right to
repurchase is denied.

But here, the burden of proof of such speculative intent is on Gregorio. His bare allegations as to
Crisologo’s manifestation of affluence, bulging coffers, and their being professionals and that most
of them are living in Canada are not enough to show that they intended to resell the property.

4) The MR was rightly denied as a client is bound by the negligence of his counsel.

LEASE
Mallarte (*Malasarte sa sylla?) v. CA, GR 85108, October 04, 1989, Griño-Aquino, J.
FACTS:
Respondents Sps. Gopiao leased to Mallarte an apartment in Sampaloc Manila on a monthly basis
with rental of P300. The lease agreement prohibited the subleasing or assignment of a portion of
the leased premises. The Gopiaos, thru their attorney-in-fact, made annual inspections of their
apartment. They discovered that 2 rooms on the second floor and a portion of the living and dining
rooms had been converted into bed spaces for boarders. There were 8 bedspacers and boarders.
Gopiao, alleging that Mallarte violated the lease contract, demanded he vacate. Mallarte refused.
The Gopiaos filed a complaint in the barangay court, which eventually reached the courts. Mallarte
claims that the boarders were his nephew, grandchildren, and other relatives who were students in
FEU. The city court, RTC, and CA all held that he violated the lease and ordered him to vacate.
Hence this petition.

ISSUE:
Whether Mallarte violated the prohibition against sublease.
HELD: NO.
The taking in of boarders without the consent of the lessors did not violate the lease agreement,
for a prohibition against subleasing may not embrace the taking in of boarders. Accepting boarders
is not equivalent to subleasing the premises. The lessee, by accepting boarders and assigning
rooms or bed spaces for them in the leased premises, does not relinquish or surrender his lease to
them. He did not cease to become the actual occupant and possessor of the demised premises. He
did not surrender the possession and control of the leased premises or a part thereof. By accepting
boarders, Mallarte did not sublease parts of the apartment but only agreed to provide them with
meals and lodging for a price.

Since a roomer is not a tenant in the strict legal sense, there is no sublease. A sublease is a grant
by a tenant of an interest in the demised premises less than his own, retaining to himself a
reversion, and a subtenant is a person who rents all or a portion of leased premises from the lessee
for a term less than the original one, leaving a reversionary interest in the first lessee."

Since the contract does not prohibit Mallarte from accepting roomers, bed spacers, or boarders, the
lease was not violated. There is no cause of action to eject Mallarte.
Chua Tee Dee v. CA, GR 135721, May 27, 2004, Callejo, Sr., J.
FACTS:
JC Agricom Development Corporation owns a rubber plantation in Davao. It leased the plantation
to Chua Tee Dee for 15 years. Referring to Chua as the second party and Agricom as the first party,
it provides:
6. FARM PERSONNEL: Upon the effectivity of this Contract, the SECOND PARTY has
the option to select and screen those farm personnel that the SECOND PARTY shall retain;
those not selected shall then be terminated by the FIRST PARTY, whose separation from
the FIRST PARTY's employment shall be the concern of the FIRST PARTY.

11. The FIRST PARTY shall maintain the SECOND PARTY in the quiet peaceful
possession and enjoyment of the leased premises during the effectivity of the lease.

Agricom’s president Alba met with the employees of the rubber plantation and updated them on
their impending termination due to the lease. Liguiz of Agricom later sent letters to said employees
informing them of their termination and that they will be given ½ month’s salary separation pay
for every year of service. The severed employees filed a complaint for illegal dismissal and unfair
labor practice against Agricom.

Because Chua Tee Dee, doing business under Pioneer Enterprises, was dragged into labor
disputes not of its own making, it wrote Agricom for a conference to settle the labor case,
otherwise she would consider the lease rescinded. Pioneer also complained of being pestered by
some individuals who claimed portions of the plantation as their own property, some even going
to its office and presented tax declarations to prove their claims. Pioneer claims that this prevented
it from fully operating the agreed area in the lease contract.

Agricom stockholders-owners Carriedo heirs sent a note to Amado Dee, husband of Chua,
demanding payment of rentals. Pioneer was unable to pay its rentals. A civil complaint for sum of
money was filed against Chua in RTC. Chua answered, claiming that it was Agricom who failed
to comply with the terms of the lease contract when it failed to settle labor disputes with its former
employees and that Agricom failed to maintain her in the quiet and peaceful possession and
enjoyment of the leased property, violating pars. 6 and 11 of the contract. She filed counterclaim
for besmirched reputation, mental anguish etc. due to the violation of the contract.

RTC ordered Chua to pay rentals since she occupied the rubber plantation during the time the case
was pending. CA affirmed, only reducing attorney’s fees. Hence this petition.

ISSUE:
Whether Agricom violated its obligation to keep Chua in the peaceful and adequate possession of
the leased property under Art. 1654.
HELD: NO.
Chua claims that she had the right to suspend payment of rentals because Agricom breached its
lease contract. She relies on Art. 1658 of NCC. Thus, she paid only up to June 30, 1990 and
suspended payment thereafter. Chua claims that Agricom failed to maintain her in quiet and
peaceful enjoyment and that she was pestered by several claimants of the leased premises in
violation of pars. 6 and 11 of the lease contract. She was forced to pay bond premiums in the labor
case of P306k. She also claims moral damages.

1) As lessor, Agricom had the duty to maintain Chua in the peaceful and adequate enjoyment of
the leased property. even if such duty was not made part of their contract, Art. 1654 provides:
Art. 1654. The lessor is obliged:
Xxx
(3) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire
duration of the contract.
Art. 1654 par. 3 is merely a warranty that the lessee shall not be disturbed in his legal and not
physical possession. in Goldstein v. Roces, we denied the lessee’s claim of damages resulting
from the opening of holes in the roof as the lessor had allowed another lessee to construct another
floor to the leased building. We held:

That there was a disturbance of the peace or order in which he maintained his
things in the leased storey does not mean he lost the peaceful enjoyment of the thing
rented. The peace would also have been disturbed had some hotel tenant living above his
floor poured water on his bar, some patrons of the hotel went to his saloon and broke his
glassware, etc. In all cases in which the lessee might fail to peacefully enjoy the floor leased
to him he might have a right of action against to recover damages from those who
disturbed his peace, but not against the lessor to compel the latter to maintain him in the
peaceful enjoyment of the thing.

Here, Chua claims that several claimants presented tax declarations and claimed portions of the
leased premises. But no CASE was filed by these claimants against her or her lessor. Thus, she
had not been disturbed in her legal possession in violation of Art. 1654. When Chua saw that part
of the leased premises was being fenced by the claimants, she had all the right to sue the intruders
who had disturbed her physical possession as provided in Art. 1664 (mere act of trespass). Thus,
par. 11 of the contract was not violated.

2) Chua failed to prove any loss she suffered from the labor case. During the pendency of the case,
she paid regularly her rentals from 1985-1989. It was after the labor case was dismissed that she
started to fail to pay her rents, indicating that the labor case did not hamper her possession.

3) As to back rentals, it should cover only from July 1990 until she vacated because the previous
years had already been paid.

Tagbilaran Integrated Settlers Association Incorporated v. CA, GR 148562, November 25,

2004, Carpio-Morales, J.
FACTS:
Tagbilaran Integrated (TISA) is an organization founded by individuals who have residential and
business establishments in a commercial lot in Tagbilaran City. The lot is owned by respondent
Tagbilaran Women’s Club (TWC). TWC entered into separate lease contracts for one year with
individual petitioners Aurelio Cirunay et al. Among the stipulation is that the period of lease shall
be for one year only. The other petitioners Crisosa Tapay et al. are sublessees.
In a letter to petitioners on January 06, 1990, TWC demanded that they vacate due to expiration
of the lease contract, non-payment of rents, violations of the conditions of the lease. Petitioners
refused. TWC entered into a lease contract with one Lambert Lim, but petitioners still refused to
vacate, claiming that the lease with Lim is void since TWC impliedly extended to them new
leases when it continued collecting monthly rentals from them.

Petitioners filed a petition against TWC and Lim for annulment of contract of lease. RTC dismissed
the petition, finding the lease with Lim to be valid. CA affirmed. Hence this petition.

ISSUE:
Whether the lease to TISA remains subsisting.
HELD: NO.
1) The lease between TWC and petitioners in 1986/1987 were for a period of one year. Following
Art. 1669, the lease contracts having been executed for a determinate time, they ceased on the
day fixed, that is, a year after their execution without need of further demand.

2) While no subsequent lease contracts extending the original lease was made, TWC allowed
petitioners to continue occupying the lot as it continued to accept monthly rentals. Thus, an
implied new lease was created under Art. 1670 of NCC:
If at the end of the contract the lessee should continue enjoying the thing leased for fifteen
days with the acquiescence of the lessor, and unless a notice to the contrary by either party
has previously been given, it is understood that there is an implied new lease, not for the
period of the original contract, but for the time established in Articles 1682 and 1687. The
other terms of the original contract shall be revived.

Since the period for the implied lease was not fixed and the rentals were paid monthly, the contract
was from month-to-month under Art. 1687.

3) A month-to-month lease in Art. 1687 is with a definite period and thus terminable at the end
of each month upon DEMAND to vacate by the lessor.

When notice to vacate on January 06, 1990 was sent to petitioners, the implied lease (tacita
reconduccion) was ABORTED. For a notice to vacate is an express act on the lessor’s part that it
no longer consents to the continued occupation by the lessees of its property. The notice in Art.
1670 is one given after the expiration of the lease period for the purpose of aborting an implied
renewal of the lease.

4) As to petitioners’ contention that TWC violated Art. 1654 (c) when it entered into a lease with
Lim on Feb. 25, 1993, this does not lie. After petitioners were notified by letter of January 6, 1990
to vacate, the implied new lease had been aborted and they had no right to continue occupying the
lot. Their continued occupation had thus become unlawful. The lessor is obliged in Art. 1654 to
maintain the lessee in the peaceful and adequate enjoyment of the lease only for the duration of
the contract.

5) PD 1517, Proc. 1893, RA 7279, PD 20 are not applicable as petitioners are not covered therein.
Sps. Golez v. Nemeño, GR 178317, September 23, 2015, Villarama, Jr., J.
FACTS:
Nemeño owns a commercial lot in Molave, Zamboanga del Sur. On May 31, 1989, he leased it to
Sps. Ricardo and Elena Golez. They agreed that Sps. Golez shall construct a building on the lot
worth P143k. The monthly rental shall be P2k pesos which shall not be collected by Nemeño and
instead shall be applied as payment for the building built. The term is 4 years extendible if the
P143k is not yet fully paid. If fully paid, the building shall then belong to Nemeño.

Sps. Golez insured the building for greater than its amount. Then on May 23, 1992, the building
built and subject of the contract was burned down. Because of this, Nemeño demanded that Sps.
Golez pay the accumulated rentals from March 17, 1989 to June 17, 1992. Sps. Golez refused.
Nemeño filed a complaint for collection of rentals.

Nemeño claims that Ricardo is responsible for burning the building. He claims that Ricardo was
charged with arson in MTC which found probable cause against him (which MTC finding was
approved by the prosecutor, but eventually dismissed by DOJ, so no case was filed against
Ricardo). He prayed for P96k unpaid rentals from March 17, 1989 and P100k as damages.

Sps. Golez claims that Nemeño had become a co-owner of the building since the rental payment
is amortized to its cost. Thus, he must also suffer the loss. As counterclaim, Sps. Golez claims that
Nemeño has a loan of P11k from them which is unpaid, evidenced by letters written by Nemeño.

During trial, the MTC judge prohibited the parties from presenting evidence as to Ricardo’s
responsibility for the burning, saying it was not relevant. But MTC ruled that Nemeño did not
become the co-owner and thus the building was wholly owned by Sps. Golez. It also found Ricardo
to be the author of the burning, taking into consideration the insurance proceeds Sps. Golez would
get from the burning, applying S6, PD 1613 amending the Law on Arson.

CA affirmed, saying that Sps. Golez must suffer the loss. They cannot use Nemeño’s land and
deprive him of rents due him or it would be a case of unjust enrichment.

ISSUE:
Whether Sps. Golez is liable for the rentals.
HELD: YES.
Sps. Golez claims that MTC itself made it clear that the suit is not based on any alleged arson, but
it still relied on the PI finding of probable cause against Ricardo which was reversed by DOJ. They
claim that they are not liable for back rentals pursuant to Art. 1262, since they had the obligation
to deliver a determinate thing, the building. Its total loss extinguished their obligation. The
burning was a fortuitous event.

1) The contract entered into by the parties is one of lease although it had some modifications such
that instead of paying the rent in money, Sps. Golez will withhold such payment and apply the
accumulated rent to the cost of the building. At the end of the lease, the building’s ownership will
be transferred to Nemeño.
The destruction of the building should not be made a basis to exempt Sps. Golez from paying rent
for the period they made use of the leased property. otherwise, there will be UNJUST
ENRICHMENT. (1. Enrichment of defendant; 2.impoverishment of plaintiff; 3. Lack of cause.)
Here, Sps. Golez used the property for several years operating a restaurant thereon. Thus, it would
be the height of injustice to deprive Nemeño of the compensation due him on the use of his
property. that the parties agreed to a different mode of payment- here a building- does not in
any way exempt Sps. Golez from paying compensation due to Nemeño because the building
was destroyed.

2) Sps. Golez is liable for rent only during the period they were in possession. there is no evidence
that they stayed in the leased property after the fire. Thus, they should be made to pay rent until
that time only. To order them to pay back rentals equal to the cost of the building is unjust
enrichment this time on Nemeño’s part since the rent due is below the building’s cost.

3) The award of moral, temperate/compensatory, and exemplary damages has no factual and legal
bases. These were not pleaded nor proven. Even the finding that Ricardo was the author of the fire
will not make Nemeño entitled to such damages because both parties were preventing from
presenting evidence to prove or disprove that there was arson.

4) The alleged loan of Nemeño of P11k is dismissed also. The possession of Nemeño of the PN
evidencing his debt to Sps. Golez is prima facie evidence of payment under S3(h) of Rule 131 of
RoC. The letters written by Nemeño to Sps. Golez were only to demand the surrender of the
promissory notes and not to acknowledge that his obligation remains outstanding.