Heirs of Vda de Sebua v. Bravante

CivRev 2 Subject/s: Contract of Sale
Topic: Equitable Mortgage (Civil Code Arts. 1602-1605)
HEIRS OF ANIOLINA VDA. DE SEBUA v. FELICIANA BRAVANTE

G.R. No. 244422, July, 6, 2022
ZALAMEDA, J.
Doctrine: In determining the nature of a contract, courts are not bound by the title nor by the
name given by the parties. The decisive factor in evaluating such agreement is the intention
of the parties as shown by their conduct, words, actions, and deeds prior to, during, and
immediately after executing the agreement.
Facts: Aniolina and her husband Exequiel Sebua were owners of a parcel of land in South
Cotabato. Sometime in 1986, Exequiel mortgaged the subject land to respondent Feliciana
Bravante’s husband, Julian Bravante, for granting him a loan in the amount of P130K.
Exequiel and Julian agreed, among others, that Julian was to cultivate the land and to keep
the income arising therefrom until Exequiel was able to redeem the land. Later, sometime in
1995, Exequiel visited Julian to pay the loan and to redeem the land; however, Julian
requested that he be allowed to continue cultivating it, which Exequiel granted. Again,
sometime in 2003, Exequiel attempted to redeem it but he learned that Julian already died a
year earlier. Subsequently in November 2003, Exequiel died as well.
After Exequiel’s death, his children (petitioners) signified, in several instances, their intention
to redeem the land from the respondent. To their surprise, the respondent was already
claiming ownership over the property. During the barangay conciliation, respondent denied
Aniolina and Exequiel’s ownership over the land. She averred that sometime in 1980, the two
mortgaged the subject land to a certain person named Recto. She further alleged that the
spouses approached her and her husband to borrow P17K with the subject lot as security in
order for them to pay the loan from Recto. Petitioners and Exequiel failed to return the
amount loaned upon demand. Instead, they made additional loans from respondent and her
husband. On March 1985, the total amount of the loan reached P22,202. Since the amount of
their loan had already exceeded the consideration of their mortgage contract, Aniolina and
Exequiel allegedly agreed to waive their rights to the land in respondent and her husband’s
favor, for the total consideration of P30K. Respondent contends that she and her husband are
the lawful owners of the subject land by virtue of the payment they made which was
acknowledged by spouses Sebua. A complaint for redemption, recovery of possession,
damages, and attorney’s fees with prayer for TRO and/or preliminary injunction was filed
before the RTC after the parties failed to reach a settlement.The RTC, based on inference,
characterized the transaction as an equitable mortgage. CA reversed and set aside RTC’s
decision. Hence, this petition.
Issues:
1) Whether or not the transaction between spouses Sebua and spouses Bravante is an
equitable mortgage.
2) Whether or not respondent’s consolidation of ownership over the subject property is
legal.
Ruling:
1) YES, the transaction involved in this case is an equitable mortgage. Even though there
is no single conclusive test to determine whether a deed of sale is really a simple loan
accommodation, Article 1602, in relation to Article 1604 of the Civil Code
enumerates instances when a contract is presumed to be an equitable mortgage. The
presence of even one of the circumstances in Article 1602 is sufficient to declare a
contract as an equitable mortgage.
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 extended;
(4) When the purchaser retains for himself [or herself] a part of the purchase price;
(5) When the vendor binds himself [or herself] 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..
ART. 1604. The provisions of Article 1502 shall also apply to a contract purporting to
be an absolute sale.
In determining the nature of a contract, courts are not bound by the title nor by the
name given by the parties. The decisive factor in evaluating such agreement is the
intention of the parties as shown by their conduct, words, actions, and deeds prior to,
during, and immediately after executing the agreement.
In this case, there is no contest that Aniolina and Exequiel were in dire need of
money. They repeatedly took out loans from respondent and her husband. Respondent
took pains to convince the lower courts that the sale price of P30K was not grossly
inadequate. She presented the 1982 Deed of Sale of an adjacent lot to show similarity
in price. However, in light of Exequiel’s repeated attempts to pay off the loan and
regain possession of the subject property coupled with his dire financial need at the
time the “acknowledgment” was signed, respondent’s claim of ownership must fail.
She cannot use petitioner’s failure to pay the loan due to her own machinations to
claim ownership to the subject property. We see no reason to deviate from the RTC’s
ruling that the transaction of the parties in this case is an equitable mortgage.
Respondent should return the subject property to petitioner upon payment of the loan
within 90 days from finality of this Decision. The amount of P30K as consideration
for the mortgage should be returned by petitioner to respondent.
2) NO, respondent’s consolidation of ownership over the subject property is illegal. The
mortgagee’s default does not operate to automatically vest on the mortgagee the
ownership of the encumbered. As a mortgagee, respondent’s consolidation of

ownership over the subject property due to petitioner and her husband’s failure to pay
the obligation is considered as pactum comissorium. This Court has repeatedly
declared such arrangement as contrary to morals and public policy and thus, void. If a
mortgagee in equity desires to obtain title to a mortgaged property, the mortgagee’s
proper remedy is the foreclosure of the mortgage in equity and buy it at a foreclosure
sale. This, respondent did not do so.

Heirs of Vda de Sebua v. Bravante

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CivRev 2 Subject/s: Contract of Sale

Topic: Equitable Mortgage (Civil Code Arts. 1602-1605)

HEIRS OF ANIOLINA VDA. DE SEBUA v. FELICIANA BRAVANTE

ownership of the encumbered. As a mortgagee, respondent’s consolidation of

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