Heirs of Vda de Sebua v. Bravante
Heirs of Vda de Sebua v. Bravante
Ruling:
CivRev 2 Subject/s: Contract of Sale
Topic: Equitable Mortgage (Civil Code Arts. 1602-1605)
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
CivRev 2 Subject/s: Contract of Sale
Topic: Equitable Mortgage (Civil Code Arts. 1602-1605)