1. ROBERTS v PAPIO FACTS:
* The Spouses Papio were the owners of a 274 sqm residential lot located in Makati. In order to secure a 59k loan from the Amparo Investments Corp, they executed a real estate mortgage on the property. Upon Papio’s failure to pay the loan, the corporation filed a petition for the extrajudicial foreclosure of the mortgage.
* Since the couple needed money to redeem the property and to prevent the foreclosure of the real estate mortgage, they executed a Deed of Absolute Sale over the property in favor of Martin Papio’s cousin, Amelia Roberts.
* Of the 95k purchase price, 59k was paid to the Amparo Investments Corp, while the 26k difference was retained by the spouses. As soon as the spouses had settled their
obligation, the corporation returned the owner’s duplicate TCT which was then delivered to Amelia Roberts.
* The parties (A. Roberts as lessor and Martin Papio as lessee) executed a 2-year contract of lease. The contract was subject to renewal or extension for a like period at the option of the lessor, the lessee waiving thereby the benefits of an implied new lease. The lessee was obliged to pay monthly rentals of 800 to be deposited in the lessor’s account.
* A new TCT was issued in the name of Amelia Roberts as owner. Martin Papio paid the rentals and thereafter for another year. He then failed to pay rentals, but he and his family nevertheless remained in possession of the property for almost 13 years.
* A. Roberts reminded Papio that he failed to pay monthly rentals amounting to a total liability of 410k.
She demanded that Papio vacate the property within 15
days from receipt of the letter in case he failed to settle the amount.
* A. Roberts filed a complaint for unlawful detainer and damages against Martin Papio
ISSUE: W/N THE DEED OF ABSOLUTE SALE AND CONTRACT OF LEASE EXECUTED BY THE PARTIES IS AN EQUITABLE MORTGAGE OVER THE PROPERTY
RULING: NO
An equitable mortgage is one that, although lacking in some formality, form or words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge a real property as security for a debt and contain nothing impossible or contrary to law. A contract between the parties is an equitable mortgage if the following requisites are present: a. the parties entered into a contract denominated as a contract of sale and b. the intention was to secure an existing debt by way of mortgage. The decisive factor is the intention of the parties.
In an equitable mortgage, the mortgagor retains ownership over the property but subject to foreclosure and sale at public auction upon failure of the mortgagor to pay his obligation.
In contrast, in a pacto de retro sale, ownership of the property sold is immediately transferred to the vendee a retro subject only to the right of the vendor a retro to repurchase the property upon compliance with legal requirements for the repurchase. The failure of the vendor a retro to exercise the right to repurchase within the agreed time vests upon the vendee a retro, by operation of law, absolute title over the property.
One repurchases only what one has previously sold.
The right to repurchase presupposes a valid contract of sale between same parties. By insisting that he had repurchased the property, Papio thereby admitted that the deed of absolute sale executed by him and Roberts was in fact and in law a deed of absolute sale and not an equitable mortgage; he had acquired ownership over the property based on said deed.
Respondent, is thus estopped from asserting that the contract under the deed of absolute sale is an equitable mortgage unless there is an allegation and evidence of palpable mistake on the part of respondent, or a fraud on the part of Roberts.
2. MISTERIO v CEBU STATE COLLEGE OF SCIENCE AND TECHNOLOGY
FACTS: Asuncion sold to Sudlon Agricultural High School (SAHS) a parcel of land, reserving the right to repurchase the same in case (1) the school ceases to exist, or (2) the school transfers location. She had her right annotated. She died. By virtue of BP 412, SAHS was merged with the Cebu State College, effective June 1983. In 1990, the heirs of Asuncion sought to exercise their right to redeem, claiming that school has ceased to exist.
ISSUE: W/N the heirs of Asuncion may still exercise their right to redeem the property
HELD: NO. Their right has already prescribed.
Considering that no period for redemption was agreed upon, the law imposes a 4-year limitation. This means that from the time the school was merged to Cebu State College, they had 4 years, or until June 1987 to redeem the property. However, they failed to do so within the period. Failure to redeem automatically consolidates ownership in favor of the vendee. The fact that the right to redeem was annotated does not make it imprescriptible, it only serves to notify third persons.
3. SOLID HOMES INC v CA FACTS:
* Solid Homes executed in favor of State Financing Center a Real Estate Mortgage on its properties embraced in the TCT, in order to secure the payment of a loan of 10M which the former obtained from the latter.
* A year later, Solid Homes applied for and was granted an additional loan of 1, 511,270.03 by State Financing, and to secure its payment, Solid executed an amendment to real estate mortgage whereby the credits secured by the first mortgage on the abovementioned properties were increased from 10M to 11,511,270.03.
* Solid homes obtained additional credits and financing facilities from State Financing in the sum of 1,499,811.97 and to secure its payment, the former executed the amendment to real estate mortgage whereby the mortgage executed on its properties was again amended so that the loans or credits secured thereby were further increased from 11,511, 270.03 to 13,011,082.00
* When the obligations became due and payable, State Financing made repeated demands upon Solid homes for the payment thereof, but the latter failed to do so.
* State Financing filed a petition for extrajudicial foreclosure of the mortgages who in pursuance of the petition, issued a notice of sheriff’s sale whereby the mortgaged properties of Solid homes and the improvements existing thereon, including the V.V.
Soliven Towers II Building were set for public auction sale in order to satisfy the full amount of Solid homes’
mortgage indebtedness, the interest thereon, and the fees and expenses incidental to the foreclosure proceedings.
* Before the scheduled public auction sale, the mortgagor Solid homes made representations and induced State Financing to forego with the foreclosure of the real estate mortgage. By reason thereof, State Financing agreed to suspend the foreclosure of mortgaged properties, subject to the terms and conditions they agreed upon, and in pursuance of the said agreement, they executed a document entitled MEMORANDUM OF AGREEMENT/DACION EN PAGO.
ISSUE:
1. W/N THE MEMORANDUM OF AGREEMENT/
DACION EN PAGO EXECUTED BY THE PARTIES IS VALID AND BINDING
2. W/N SOLID HOMES CAN CLAIM DAMAGES ARISING FROM THE NON-ANNOTATION OF ITS
RIGHT OF REPURCHASE IN THE CONSOLIDATED TITLES
RULING: 1. YES | 2. NO
The Memorandum of Agreement/Dacion En Pago was valid and binding, and that the registration of said instrument in the Register of Deeds was in accordance with law and the agreement of the parties.
Solid homes utterly failed to prove that respondent corporation had maliciously and in bad faith caused the non-annotation of petitioner’s right of repurchase so as to prevent the latter from exercising such right.
On the contrary, it is admitted by both parties that State Financing informed Solid homes of the registration with the register of deeds of their memorandum of agreement/dacion en pago and the issuance of the new certificates of title in the name of State Financing.
Clearly, petitioner was not prejudiced by the non-annotation of such right in the certificates of title issued in the name of State Financing. Also, it was not the function of the corporation to cause said annotation. It was equally the responsibility of petitioner to protect its own rights by making sure that its right of repurchase was indeed annotated in the consolidated titles of State Financing.
The only legal transgression of State was its failure to observe the proper procedure in effecting the consolidation of the titles in its name. But this does not automatically entitle the petitioner to damages absent convincing proof of malice and bad faith on the part of private respondent-corporation
4. A. FRANCISCO REALTY v CA
FACTS: A. Francisco Realty and Development Corp.
granted a loan worth P7.5M in favor of spouses Javillonar, to which the latter executed three documents: a) a promissory note containing the interest charge of 4% monthly, b) a deed of mortgage over the subject property, c) an undated deed of sale of the mortgaged property. Since the spouses allegedly failed to comply with the payments, petitioner registered the sale in its favor, getting a TCT issued in its name without knowledge by the spouses. Subsequently, the spouses obtained another loan worth P2.5M, signing another promissory note in favor of petitioner.
Petitioner demanded the possession of the property, as well as the interest payments, to which the spouses refused to comply. Petitioner filed an action for possession in the RTC. RTC ruled in favor of petitioner, but CA reversed.
ISSUE:
1. Whether the RTC had jurisdiction over the case (property issue)
2. Whether the sale was considered as an equitable mortgage
RULING: Even though the case was filed less than one year after the demand to vacate, making it an action of unlawful detainer, there were other issues to be considered such as: a) the validity of the transfer of
ownership, b) the alleged new liability of the spouses c) the alleged continuing liability of the spouses. It is clear that the petitioners had other issues which involve more than just a simple claim of of immediate possession, and thus the RTC had jurisdiction over the case.
However, the transfer was in the nature of pactum commissorium, since the sale was really considered as an equitable mortgage. It was really intended by the spouses to make such undated deed of sale a security.
Also, when petitioners transferred the title in its name, the spouses was never informed of such action. Such transfer was therefore void, making the TCT held by petitioners null and void as well.
5. ABILLA v GOBONSENG
FACTS: Spouses Abilla instituted against Spouses Gobonseng an action for specific performance, recovery of sum of money and damages, seeking the reimbursement of the expenses they incurred in the preparation and registration of 2 public instruments--Deed of Sale and Option to Buy. As a defense, Spouses Gobonseng contended that the transaction covered by these instruments was a mortgage. RTC ruled in favor of Spouses Abilla, stating that it was a sale giving Spouses Gobonseng until Aug. 31, 1983 within which to buy back the 17 lots subject of the sale. CA affirmed and held that the transaction was a pacto de retro sale, and not an equitable mortgage.
In 1999, Spouses Gobonseng filed with the RTC an urgent motion to repuchase the lots with tender of payment, which was denied. However, after the judge inhibited himself from the case, it was reraffled to a different branch, which granted the motion to repurchase.
ISSUE: W/N Spouses Gobonseng may exercise the right to repurchase, as stipulated in Art. 1606 (3)
HELD: NO. Sellers in a sale judicially-declared as pacto de retro may NOT exercise the right to repurchase within the 30-day period provided under Art. 1606, although they have taken the position that the same was an equitable mortgage, if it shown that there was no honest belief thereof since: (a) none of the circumstances under Art. 1602 were shown to exist to warrant a conclusion that the transaction was an equitable mortgage; and (b) that if they truly believed the sale to be an equitable mortgage, as a sign of good faith, they should have consigned with the trial court the amount representing their alleged loan, on or before the expiration of the right to repurchase.
6. FRANCISCO v BOISER FACTS:
• Petitioner Adalia Francisco and three of her sisters, Ester, Elizabeth, and Adeluisa, were co-owners of four parcels of registered land in Caloocan City
• On August 1979, they sold 1/5 of their undivided share to their mother, Adela Blas, for PhP10,000, making her a co-owner of the real property to that extent
• 7 years later, in 1986, however, Adela sold her 1/5 share for PhP10,000 to respondent Zenaida Boiser, another sister of petitioner
• In 1992 or 6 years after the sale, Adalia received summons with a copy of a complaint by Zenaida demanding her share in the rentals being collected from the tenants of the Ten Commandments Building, which stands on the co-owned property
• Adalia then informs Zenaida that she was exercising her right of redemption as co-owner of the subject property, depositing for that purpose PhP10,000 with the Clerk of Court
• The case was however dismissed after Zenaida was declared non-suited, and Adalia’s counterclaim was thus dismissed as well
• 3 years after, Adalia institutes a complaint demanding the redemption of the property, contending that the 30-day period for redemption under Art. 1623 had not begun to run against her or any of the other co-owners, since the vendor Adela did not inform them about the sale, which fact they only came to know of when Adalia received the summons in 1992
• Zenaida on the other hand contends that Adalia already knew of the sale even before she received the summons since Zenaida had informed Adalia by letter of the sale with a demand for her share of the rentals three months before filing suit, attaching to it a copy of the deed of sale
• Adalia’s receipt of the said letter is proven by the fact that within a week, she advised the tenants of the building to disregard Zenaida’s letter-demand
• The trial court dismissed the complaint for legal redemption, holding that Art. 1623 does not prescribe any particular form of notifying co-owners on appeal, the CA affirmed
ISSUE: Whether the letter-demand by Zenaida to Adalia, to which the deed of sale was attached, can be considered as sufficient compliance with the notice requirement of Art. 1623 for the purpose of legal redemption
HELD:
• The petitioner points out that the case does not concern the particular form in which such notice must be given, but rather the sufficiency of notice given by a vendee in lieu of the required notice to be given by the vendor or prospective vendor
• The text of Art. 1623 clearly and expressly prescribes that the 30 days for making the redemption shall be counted from notice in writing by the vendor it makes sense to require that notice be given by the vendor and nobody else, since the vendor of an undivided interest is in the best position to know who are his co-owners, who
under the law must be notified of the sale
• Notice by the co-owner likewise removes all doubt as to the fact of the sale, its perfection, and its validity by not immediately notifying, or not notifying at all, a co-owner, the vendor can delay or even effectively prevent the meaningful exercise of the right of redemption
• However, it would be unjust in the case at bar to require the vendor Adela to serve notice of the sale, when the fact has already been established in both lower courts Adalia has effectively exercised her right when she deposited the PhP10,000 redemption price 7 days after receiving the summons
Fallo
• Petition granted, decision of the CA reversed
• The decision in Etcuban v. CA is abandoned, and the one in Butte v. Manuel Uy and Sons, Inc., as affirmed in Salatandol v. Retes, upheld
NOTE
• The Court failed to negate or possibly appreciate the fact of Adalia’s knowledge of the sale prior to the summons, as proven her letter-advise to the tenants of the building
• The period given by the Court to Adalia was 30 days after the receipt of the summons on 5 August 1992, which is 4 September 1992
7. SORIANO v BAUTISTA
FACTS: Bautista spouses mortgaged their lot to Soriano, who took possession thereof and cultivated the same.
Pursuant to Par. 5 of their agreement, Soriano decided to buy the lot. Bautista refused to sell claiming that being mortgagors, they cannot be deprived of their right to redeem the property.
ISSUE: W/N Soriano may buy the mortgaged property of Bautista
HELD: YES. True that the transaction is a mortgage, which carried with it a customary right of redemption.
However, the mortgagor’s right to redeem was rendered defeasible at the election of the mortgagees by virtue of Par. 5, allowing them the option to purchase the said lot. There is nothing immoral or illegal about such stipulation. It was supported by the same consideration as the mortgage contract and constituted an irrevocable continuing offer within the time stipulated. That being the case, Bautista spouses must be compelled to honor the sale.
ASSIGNMENT
1. NYCO SALES CORP v BA FINANCE
FACTS: NYCO Sales Corp extended a credit accommodation to the Fernandez Brothers. The brothers, acting in behalf of Sanshell Corp, discounted a BPI check for P60,000 with NYCO, which then indorsed the said check to BA Finance accompanied by a Deed of Assignment. BA Finance, in turn, released the funds, which were used by the brothers. The BPI check was dishonored. The brothers issued a substitute check, which was also dishonored. Now BA Finance goes after NYCO, which disclaims liability.
ISSUE: W/N NYCO, as the assignor, is liable for breach of warranties
HELD: YES. The assignor (NYCO) warrants both the existence and legality of the credit, as well as the solvency of the debtor. If there is a breach of any of the 2 warranties, the assignor is liable to the assignee. That being the case, NYCO cannot evade liability. So long as the credit remains unpaid, the assignor remains liable notwithstanding failure to give notice of dishonor that is because the liability of NYCO stems form the assignment, not on the checks alone.
2. LICAROS v GATMAITAN
FACTS: Abelardo Licaros invested his money worth
$150,000 with Anglo-Asean Bank, a money market placement by way of deposit, based in the Republic of Venatu. Unexpectedly, he had a hard time getting back his investments as well as the interest earned. He then sought the counsel of Antonio Gatmaitan, a reputable banker and investor. They entered into an agreement, where a non-negotiable promissory note was to be executed in favor of Licaros worth $150,000, and that Gatmaitan would take over the value of the investment
made by Licaros with the Anglo-Asean Bank at the former's expense. When Gatmaitan contacted the foreign bank, it said they will look into it, but it didn't prospered. Because of the inability to collect, Gatmaitan did not bother to pay Licaros the value of the
made by Licaros with the Anglo-Asean Bank at the former's expense. When Gatmaitan contacted the foreign bank, it said they will look into it, but it didn't prospered. Because of the inability to collect, Gatmaitan did not bother to pay Licaros the value of the