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Prof. Joselito Guianan Chan's The Labor Code of the Philippines, Annotated Labor Standards & Social Legislation Volume I of a 3-Volume Series 2019 Edition (3rd Revised Edition)
 

 
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UNITED STATES SUPREME COURT JURISPRUDENCE
 

 
PHILIPPINE SUPREME COURT JURISPRUDENCE
 

   
October-2003 Jurisprudence                 

  • A.M. No. P-02-1548 October 1, 2003 - ROBERT E. VILLAROS v. RODOLFO ORPIANO

  • A.M. Nos. P-03-1697 & P-03-1699 October 1, 2003 - JOCELYN S. PAISTE v. APRONIANO V. MAMENTA

  • G.R. Nos. 133066-67 October 1, 2003 - PEOPLE OF THE PHIL. v. ROMEO H. LAMBID

  • G.R. No. 137554 October 1, 2003 - PEOPLE OF THE PHIL. v. JOHN MAMARION, ET AL.

  • G.R. No. 148198 October 1, 2003 - PEOPLE OF THE PHIL. v. ELIZABETH CORPUZ

  • G.R. Nos. 150630-31 October 1, 2003 - PEOPLE OF THE PHIL. v. JAIME OLAYBAR

  • G.R. No. 152176 October 1, 2003 - PEOPLE OF THE PHIL. v. ROGER D. DELA CRUZ

  • G.R. No. 154130 October 1, 2003 - BENITO ASTORGA v. PEOPLE OF THE PHIL.

  • G.R. No. 156034 October 1, 2003 - DELSAN TRANSPORT LINES, INC. v. C & A CONSTRUCTION, INC.

  • A.M. No. RTJ-03-1803 October 2, 2003 - VICTOR A. ASLARONA v. ANTONIO T. ECHAVEZ

  • G.R. No. 128882 October 2, 2003 - PEOPLE OF THE PHIL. v. JOEL AYUDA

  • G.R. No. 145337 October 2, 2003 - PEOPLE OF THE PHIL. v. LEE HOI MING

  • G.R. No. 150382 October 2, 2003 - PEOPLE OF THE PHIL. v. EDDIE BASITE

  • A.C. No. 6061 October 3, 2003 - RAUL C. SANCHEZ v. SALUSTINO SOMOSO

  • A.M. MTJ-00-1311 October 3, 2003 - SILVESTRE H. BELLO III v. AUGUSTUS C. DIAZ, ET AL.

  • A.M. No. P-02-1547 October 3, 2003 - LEOPOLDO V. CAÑETE v. NELSON MANLOSA

  • A.M. No. P-02-1550 October 3, 2003 - AMELIA L. AVELLANOSA v. JOSE Z. CAMASO

  • G.R. No. 118375 October 3, 2003 - CELESTINA T. NAGUIAT v. COURT OF APPEALS, ET AL.

  • G.R. No. 122134 October 3, 2003 - ROMANA LOCQUIAO VALENCIA, ET AL. v. BENITO A. LOCQUIAO, ET AL.

  • G.R. No. 143388 October 6, 2003 - SPS. ROLANDO and ROSITA CRUZ v. COURT OF APPEALS, ET AL.

  • G.R. No. 146569 October 6, 2003 - PEOPLE OF THE PHIL. v. JOHN NEQUIA

  • A.M. Nos. P-03-1744–45 October 7, 2003 - FE ALBANO MADRID v. ANTONIO T. QUEBRAL

  • G.R. No. 135377 October 7, 2003 - DSR-SENATOR LINES, ET AL. v. FEDERAL PHOENIX ASSURANCE CO., INC.

  • G.R. No. 149453 October 7, 2003 - PEOPLE OF THE PHIL., ET AL. v. PANFILO M. LACSON

  • G.R. No. 149717 October 7, 2003 - EASTERN ASSURANCE & SURETY CORP. v. LTFRB

  • G.R. No. 155258 October 7, 2003 - CONRADO S. CANO v. PEOPLE OF THE PHIL.

  • A.C. No. 4881 October 8, 2003 - RAU SHENG MAO v. ANGELES A. VELASCO

  • G.R. No. 120864 October 8, 2003 - MANUEL T. DE GUIA v. COURT OF APPEALS, ET AL.

  • G.R. No. 136845 October 8, 2003 - PEOPLE OF THE PHIL. v. GUILLERMO FLORENDO

  • G.R. No. 145166 October 8, 2003 - PEOPLE OF THE PHIL. v. ALBERTO ROMERO, ET AL.

  • G.R. No. 146118 October 8, 2003 - SAMUEL SAMARCA v. ARC-MEN INDUSTRIES, INC.

  • G.R. Nos. 148056-61 October 8, 2003 - PEOPLE OF THE PHIL. v. JOSE DE CASTRO

  • G.R. No. 149420 October 8, 2003 - SONNY LO v. KJS ECO-FORMWORK SYSTEM PHIL., INC.

  • G.R. No. 152776 October 8, 2003 - HENRY S. OAMINAL v. PABLITO M. CASTILLO, ET AL.

  • G.R. No. 153751 October 8, 2003 - MID PASIG LAND DEVELOPMENT CORP. v. COURT OF APPEALS, ET AL.

  • G.R. No. 154579 October 8, 2003 - MA. LOURDES R. DE GUZMAN v. PEOPLE OF THE PHIL.

  • A.M. No. P-96-1179 October 10, 2003 - WINSTON C. CASTELO v. CRISTOBAL C. FLORENDO

  • G.R. No. 110604 October 10, 2003 - BUENAVENTURA S. TENORIO, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 140917 October 10, 2003 - MENELIETO A. OLANDA v. LEONARDO G. BUGAYONG, ET AL.

  • A.M. No. P-02-1640 October 13, 2003 - SAAD ANJUM v. CESAR L. ABACAHIN, ET AL.

  • G.R. No. 122765 October 13, 2003 - PEOPLE OF THE PHIL. v. EDGARDO L. VARGAS

  • G.R. No. 141942 October 13, 2003 - PEOPLE OF THE PHIL. v. JIMMY PONCE JAMON

  • G.R. No. 143842 October 13, 2003 - PEOPLE OF THE PHIL. v. MANGI L. ADAM

  • G.R. No. 144662 October 13, 2003 - SPS. EFREN AND DIGNA MASON, ET AL. v. COURT OF APPEALS, ET AL.

  • A.M. No. MTJ-02-1459 October 14, 2003 - IMELDA Y. MADERADA v. ERNESTO H. MEDIODEA

  • A.M. No. P-03-1674 October 14, 2003 - PABLO B. FRANCISCO v. OLIVIA M. LAUREL

  • A.M. No. RTJ-03-1805 October 14, 2003 - TEODORA A. RUIZ v. ROLANDO G. HOW

  • G.R. No. 153157 October 14, 2003 - PHILIPPINE AIRLINES v. ARTHUR B. TONGSON

  • A.M. No. RTJ-02-1697 October 15, 2003 - EUGENIO K. CHAN v. JOSE S. MAJADUCON

  • A.M. No. RTJ-02-1699 October 15, 2003 - VERNETTE UMALI-PACO, ET AL. v. REINATO G. QUILALA, ET AL.

  • A.M. No. RTJ-03-1808 October 15, 2003 - RADELIA SY, ET AL. v. ANTONIO FINEZA

  • G.R. Nos. 123144, 123207 & 123536 October 15, 2003 - PABLO P. BURGOS, ET AL. v. SANDIGANBAYAN, ET AL.

  • G.R. No. 126119 October 15, 2003 - PEOPLE OF THE PHIL v. GILDO B. PELOPERO PNP

  • G.R. No. 130662 October 15, 2003 - PEOPLE OF THE PHIL. v. SERGIO ABON

  • G.R. No. 138364 October 15, 2003 - PEOPLE OF THE PHIL. v. ROGELIO VILLANUEVA

  • G.R. No. 142381 October 15, 2003 - PHILIPPINE BLOOMING MILLS, INC., ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 142595 October 15, 2003 - RACHEL C. CELESTIAL v. JESSE CACHOPERO

  • G.R. Nos. 148139-43 October 15, 2003 - PEOPLE OF THE PHIL. v. HERMENIO CANOY

  • G.R. No. 156273 October 15, 2003 - HEIRS OF TIMOTEO MORENO, ET AL. v. MACTAN-CEBU INT’L. AIRPORT AUTHORITY

  • A.M. No. SCC-00-6-P October 16, 2003 - RE: Ma. Corazon M. Molo

  • A.M. No. P-02-1592 October 16, 2003 - LUZITA ALPECHE v. EXPEDITO B. BATO

  • G.R. No. 141074 October 16, 2003 - PEOPLE OF THE PHIL. v. NORLY LIBRADO

  • G.R. No. 144881 October 16, 2003 - BETTY T. CHUA v. ABSOLUTE MNGT. CORP., ET AL.

  • G.R. Nos. 147650-52 October 16, 2003 - PEOPLE OF THE PHIL. v. RODOLFO S. PEPITO

  • G.R. No. 152492 October 16, 2003 - PALMA DEVELOPMENT CORP. v. MUN. OF MALANGAS

  • G.R. Nos. 153991-92 October 16, 2003 - ANWAR BERUA BALINDONG v. COMELEC, ET AL.

  • A.M. No. P-01-1475 October 17, 2003 - MANUEL R. AQUINO v. JOCELYN C. FERNANDEZ

  • G.R. No. 131399 October 17, 2003 - ANGELITA AMPARO GO v. OFFICE OF THE OMBUDSMAN, ET AL.

  • G.R. Nos. 133759-60 October 17, 2003 - PEOPLE OF THE PHIL. v. LEONITO LORENZO

  • G.R. Nos. 148673-75 October 17, 2003 - PEOPLE OF THE PHIL. v. FLORENCIO R. ABANILLA

  • G.R. No. 150286 October 17, 2003 - ELCEE FARMS, INC., ET AL. v. PAMPILO SEMILLANO, ET AL.

  • G.R. No. 142885 October 22, 2003 - PEOPLE OF THE PHIL. v. WILLIAM TIU, ET AL.

  • A.M. No. MTJ-01-1368 October 23, 2003 - JOSE GODOFREDO M. NAUI v. MARCIANO C. MAURICIO, SR.

  • G.R. No. 120409 October 23, 2003 - PEOPLE OF THE PHIL. v. WILLIAMSON PICKRELL, ET AL.

  • G.R. No. 120670 October 23, 2003 - PEOPLE OF THE PHIL. v. HEDISHI SUZUKI

  • G.R. No. 125689 October 23, 2003 - PEOPLE OF THE PHIL. v. ANTONIO SATIOQUIA

  • G.R. No. 127153 October 23, 2003 - PEOPLE OF THE PHIL. v. SATUR G. APOSAGA

  • G.R. No. 132788 October 23, 2003 - PEOPLE OF THE PHIL. v. ISAIAS FERNANDEZ, ET AL.

  • G.R. No. 134485 October 23, 2003 - PEOPLE OF THE PHIL. v. OSCAR PEREZ

  • G.R. Nos. 134573-75 October 23, 2003 - PEOPLE OF THE PHIL. v. VICENTE BINARAO, ET AL.

  • G.R. No. 136849 October 23, 2003 - PEOPLE OF THE PHIL. v. NESTOR A. CODERES

  • G.R. No. 138456 October 23, 2003 - PEOPLE OF THE PHIL. v. ROLANDO P. DEDUYO

  • G.R. No. 140247 October 23, 2003 - ALEX ASUNCION, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 143252 October 23, 2003 - CEBU MARINE BEACH RESORT, ET AL. v. NLRC, ET AL.

  • G.R. Nos. 146368-69 October 23, 2003 - MADELEINE MENDOZA-ONG v. SANDIGANBAYAN, ET AL.

  • G.R. No. 146608 October 23, 2003 - SPS. CONSTANTE & AZUCENA FIRME v. BUKAL ENTERPRISES AND DEV’T. CORP.

  • G.R. No. 147369 October 23, 2003 - SPS. PATRICK and RAFAELA JOSE v. SPS. HELEN and ROMEO BOYON

  • G.R. No. 147549 October 23, 2003 - JESUS DELA ROSA, ET AL. v. SANTIAGO CARLOS, ET AL.

  • G.R. No. 149149 October 23, 2003 - ERNESTO SYKI v. SALVADOR BEGASA

  • G.R. No. 149725 October 23, 2003 - OSCAR MAGNO v. PEOPLE OF THE PHIL.

  • G.R. Nos. 150493-95 October 23, 2003 - PEOPLE OF THE PHIL. v. CIRILO MACABATA

  • G.R. No. 150946 October 23, 2003 - MUNICIPAL BOARD OF CANVASSERS OF GLAN, ET AL. v. COMELEC, ET AL.

  • G.R. No. 152135 October 23, 2003 - PEOPLE OF THE PHIL. v. MARCOS GIALOLO, ET AL.

  • G.R. No. 152716 October 23, 2003 - ELNA MERCADO-FEHR v. BRUNO FEHR

  • G.R. Nos. 154796-97 October 23, 2003 - RAYMUNDO A. BAUTISTA v. COMELEC, ET AL.

  • G.R. No. 155692 October 23, 2003 - PHIVIDEC INDUSTRIAL AUTHORITY, ET AL. v. CAPITOL STEEL CORP., ET AL.

  • G.R. No. 155717 October 23, 2003 - ALBERTO JARAMILLA v. COMELEC, ET AL.

  • A.M. No. RTJ-00-1586 October 24, 2003 - THELMA C. BALDADO v. ARNULFO O. BUGTAS

  • G.R. No. 119775 October 24, 2003 - JOHN HAY PEOPLES ALTERNATIVE COALITION, ET AL. v. VICTOR LIM, ET AL.

  • G.R. No. 119847 October 24, 2003 - JENNY ZACARIAS v. NATIONAL POLICE COMMISSION, ET AL.

  • G.R. No. 137597 October 24, 2003 - PEOPLE OF THE PHIL. v. JASON S. NAVARRO, ET AL.

  • G.R. No. 141615 October 24, 2003 - MAC ADAMS METAL ENGINEERING WORKERS UNION-INDEPENDENT, ET AL. v. MAC ADAMS METAL ENGINEERING, ET AL.

  • G.R. No. 144439 October 24, 2003 - SOUTHEAST ASIA SHIPPING CORP. v. SEAGULL MARITIME CORP., ET AL.

  • G.R. No. 148120 October 24, 2003 - RODRIGO QUIRAO, ET AL. v. LYDIA QUIRAO, ET AL.

  • G.R. No. 148597 October 24, 2003 - GRACE F. MUNSAYAC-DE VILLA, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 152285 October 24, 2003 - PEOPLE OF THE PHIL. v. JOSE OBESO

  • G.R. Nos. 152589 and 152758 October 24, 2003 - PEOPLE OF THE PHIL. v. ANTONIO MENDOZA

  • G.R. No. 153828 October 24, 2003 - LINCOLN L. YAO v. NORMA C. PERELLO, ET AL.

  • G.R. No. 139181 October 27, 2003 - PEOPLE OF THE PHIL. v. JIMMY AQUINO

  • G.R. No. 143817 October 27, 2003 - PEOPLE OF THE PHIL. v. ALEJANDRO BAJAR

  • A.C. No. 5829 October 28, 2003 - DANIEL LEMOINE v. AMADEO E. BALON, JR.

  • A.M. No. P-02-1581 October 28, 2003 - MA. CORAZON M. ANDAL v. NICOLAS A. TONGA

  • G.R. No. 134563 October 28, 2003 - PEOPLE OF THE PHIL. v. FRANCISCO DALA

  • G.R. No. 138933 October 28, 2003 - PEOPLE OF THE PHIL. v. JERRYVIE D. GUMAYAO

  • G.R. No. 150540 October 28, 2003 - DIMALUB P. NAMIL, ET AL. v. COMELEC, ET AL

  • G.R. No. 155206 October 28, 2003 - GSIS v. EDUARDO M. SANTIAGO

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    G.R. No. 143388   October 6, 2003 - SPS. ROLANDO and ROSITA CRUZ v. COURT OF APPEALS, ET AL.

     
    PHILIPPINE SUPREME COURT DECISIONS

    SECOND DIVISION

    [G.R. No. 143388. October 6, 2003.]

    ROLANDO and ROSITA both surnamed CRUZ, Petitioners, v. THE HONORABLE COURT OF APPEALS, THE HONORABLE ALFREDO R. ENRIQUEZ, Presiding Judge, Metropolitan Trial Court, Branch 79, Las Piñas City, and MIGUEL and CECILIA both surnamed CAPISTRANO, Respondents.

    D E C I S I O N


    BELLOSILLO, J.:


    The Decision of the Court of Appeals of 24 April 2000 1 reversing and setting aside the Decision of RTC-Br. 135, Makati City, 2 and dismissing the Complaints filed by petitioners herein is assailed in this Petition for Review.chanrob1es virtua1 1aw 1ibrary

    Petitioners Rolando and Rosita Cruz, spouses, were the owners and operators of a dry goods stall in Divisoria. They contracted a series of loans in varied amounts from private respondents, spouses Miguel and Cecilia Capistrano, who were in the business of lending money on a "five-six" basis. Respondent Cecilia Capistrano was then operating her lending business on a portion of petitioners’ stall. The Capistranos and the Cruzes were close friends. 3

    On 31 May 1985 petitioners obtained the first of these loans in the total amount of P135,000.00 evidenced by two (2) separate receipts. 4 As conditions for the loan, private respondents required petitioner Rosita Cruz to open a checking account with PhilBanking, Las Piñas Extension Office, and thereafter asked her to sign a blank check with the promise that the check would only be for safekeeping and would not be deposited with the bank. 5 To secure the loan, private respondents obliged petitioners to surrender their Transfer Certificate of Title No. S-98034 covering a 240-square meter lot together with the house standing thereon located in San Antonio Valley XVII, Las Piñas, Metro Manila. Petitioner Rosita Cruz promptly complied with all the conditions imposed by private respondents.

    Subsequently, petitioners secured three (3) more loans from the Capistranos on various dates in the amounts of P40,000.00, 6 P15,000.00 7 and P5,000.00. 8

    Sometime in 1988, after all the sidewalk stalls in Divisoria were demolished, respondent Capistranos were no longer able to collect from the vendors who owed them. Petitioners later discovered that private respondents had mortgaged their property in Las Piñas, Metro Manila, to San Miguel Corporation (SMC) to secure payment of a credit line. Verification from the Office of the Register of Deeds of Las Piñas showed that petitioners’ TCT No. S-98034 was already cancelled and TCT No. (98729) T-2156-A was issued in the name of private respondents Miguel and Cecilia Capistrano 9 by using a Deed of Absolute Sale purportedly executed in their favor by petitioners. 10

    The parties’ respective versions as to how the disputed Deed of Absolute Sale came about differed radically. Petitioners denied executing the Deed of Absolute Sale, tenaciously asserting that at the time they were negotiating with private respondents concerning the loans, the latter required them to sign on several blank sheets of paper with the understanding that private respondents would superimpose a mortgage deed thereon, 11 but it turned out that private respondents, instead of a deed of mortgage, typed on those blank papers the deed of sale in question.

    Private respondents, on the other hand, claimed that in November 1985 petitioners intimated to them that they would not be able to pay the P195,000.00 debt upon its maturity in December 1985 and, by way of offsetting the indebtedness, they delivered to respondents a duly accomplished and notarized Deed of Absolute Sale.

    On 21 December 1988 petitioners filed a complaint against private respondents and SMC with the Regional Trial Court of Makati City, 12 seeking the annulment of the Deed of Absolute Sale (Exh. "L"), Transfer Certificate of Title No. 98729 (Exh. "K") issued in the name of private respondents, and the deeds of mortgage executed by the Capistranos in favor of SMC (Exh. "K-2"). 13 Petitioners likewise filed a criminal complaint for Estafa Through Falsification of Public Documents against private respondents before the Office of the Provincial Fiscal of Rizal. 14

    Respondent Capistranos countered with separate criminal complaints for Violation of C.A. No. 142 (Illegal Use of Aliases), Violation of BP 22, and Estafa, as well as an action for Ejectment 15 against petitioners after private respondents’ demand to vacate the subject property went unheeded.

    The criminal complaint for Estafa Through Falsification of Public Documents filed by petitioners against private respondents was later dismissed by the Office of the Provincial Fiscal of Rizal for lack of merit. As for private respondents’ criminal complaints against petitioners for Violation of C.A. No. 142, Violation of BP 22, and Estafa, the trial court eventually exonerated petitioners on reasonable doubt.chanrob1es virtua1 1aw 1ibrary

    Ultimately, what remained were Civil Case No. 88-2747 for annulment of TCT No. 98729, the deeds of sale and mortgage, pending before RTC-Br. 135, Makati City; 16 and Civil Case No. 89-5682, an appeal from the ejectment case 17 pending before RTC-Br. 275, Las Piñas, Metro Manila. On 21 February 1992 Presiding Judge Florentino M. Alumbres of RTC-Br. 275, Las Piñas, Metro Manila, ordered the consolidation of Civil Case No. 89-5682 with Civil Case No. 88-2747. 18

    On 21 March 1994, after hearing, the trial court rendered a decision in favor of petitioners and against respondent Capistranos, decreeing that: (a) The Deed of Absolute Sale dated November 5, 1985 (Exh. "7") conveying the subject property, together with the improvements thereon, covered by TCT No. S-98034 (Exh. "C") to defendant Capistranos was null and void ab initio; (b) The Transfer Certificate of Title No. (98729) T-2156-A (Exh. "K") issued by the Registry of Deeds of Las Piñas was ipso facto cancelled; (c) The Deeds of Mortgage executed by defendant Capistranos over the subject property covered by TCT No. (98729T-2156-A) to secure a credit line from SMC was null and void ab initio; (d) The Registrar of Deeds of Las Piñas issue a new title over the subject property in favor of plaintiffs devoid of any annotation of defendant Capistranos’ mortgage to SMC; (e) The questioned Order of 30 October 1989 issued by public respondent Alfredo R. Enriquez, Presiding Judge of the MTC-Br. 79, Las Piñas, Metro Manila, be set aside, and that Civil Case No. 3016 pending before him dismissed for lack of cause of action; and, (f) The defendant Capistranos should pay plaintiffs the sum of P20,000.00 as litigation expenses by way of compensatory damages, P20,000.00 as attorney’s fees, and pay the costs in these cases.

    On 24 May 1995 private respondents challenged the trial court’s decision before the Court of Appeals. 19 On 24 April 2000 the appellate court rendered its assailed Decision reversing the court a quo and dismissing the complaint filed by petitioners. The appellate court found that petitioners failed to substantiate their allegation of fraud that would warrant the annulment of the Deed of Absolute Sale in question; that "except for the allegation that the signatures of the vendors in the deed were not directly aligned to their typewritten names, no other badges of fraud were presented by the appellees (petitioners) to prove that said notarized deed of sale was not duly executed;" and, that petitioners had not presented a single receipt to prove that their indebtedness to private respondents had already been extinguished by payment.

    Their motion for reconsideration having been denied, petitioners now come to us for relief contending mainly that the Court of Appeals erred in upholding the validity of the Deed of Absolute Sale and failing to recognize that the actual transactions between the parties were in fact loans. More specifically, petitioners argue that: (a) it is the practice in "five-six" lending operations that receipts are not issued for payment and borrowers are not to demand receipts. Petitioners also claim that borrowers would not be extended succeeding loans unless they shall have fully settled the previous ones — a uniform practice in the "five-six" lending trade; (b) the awkward positions of petitioners’ signatures on the Deed of Absolute Sale, viewed vis-a-vis their typewritten names on the instrument, show very conspicuously that those signatures were affixed in blank; (c) the gross inadequacy of the purchase price appearing on the purported deed of sale, i.e., P66,000.00, showed that the purported deed of sale did not reflect the true intention of the parties. Even granting without conceding that the loans were unpaid, the proper document should have been a deed of mortgage, not sale; and, (d) it is inconceivable that petitioners would trade off their house and lot valued at P750,000.00 at the time just to pay an alleged loan of P195,000.00.

    Private respondents, on the other hand, posit in their Comment that (a) petitioners had not presented a single proof of payment of their indebtedness to private respondents in the amount of P195,000.00; (b) except for petitioners’ allegation that their signatures in the deed of sale were not directly aligned to their typewritten names, no other badges of fraud were alleged and proved by them to dispute the due execution of the deed of sale; (c) the intention of the contracting parties should prevail in determining the true nature of the contract denominated Deed of Absolute Sale, and the true intention of the parties is that of sale and not merely mortgage; and, (d) petitioners voluntarily delivered to private respondents the disputed deed of sale conveying to the latter the subject house and lot in full settlement of their indebtedness.chanrob1es virtua1 1aw 1ibrary

    At the heart of the controversy, reduced to its simplest, are: first, whether the Deed of Absolute Sale is, in reality, one of equitable mortgage; and, second whether petitioners’ loans to private respondents have already been paid.

    The Court of Appeals concluded that the contract subject of the instant case was, in fact, one of sale and not merely of mortgage, thus —

    In the absence of clear and convincing evidence of such alleged payment, We are not ready to conclude that the appellees in signing the Deed of Sale executed on November 4, 1985 merely intended a mortgage and not a deed of conveyance as the terms of the contract clearly and unmistakably indicate. The finding of non-payment of the indebtedness of appellees to appellants tends to support the claim of the appellants that the deed of sale in their favor was executed by the appellees to offset their outstanding obligation to the appellants. With no evidence showing a contrary intention, the clear and plain terms of the Deed of Sale executed between the parties must be construed as an absolute conveyance made by the debtors, herein appellees, in full settlement of their outstanding obligation with their creditors, herein appellants. 20

    We hold otherwise. Beneath the veneer of an absolute deed of sale is an entirely different agreement. Indeed, the records are replete with telltale traces of a concealed mortgage. The applicable law may be found in the New Civil Code thus —

    Art. 1602. The contract shall be presumed to be an equitable mortgage in any of the following cases:chanrob1es virtual 1aw library

    (1) When the price of the 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 of 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.

    In any of the foregoing case, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws (Emphasis supplied).

    Equally important is Art. 1604 of the same Code —

    Art. 1604. The provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale (Emphasis supplied).

    Vendors covered by Art. 1602 usually find themselves in an unequal position when bargaining with the vendees, and will readily sign onerous contracts to get the money they need. Necessitous men are not really free men in the sense that to answer a pressing emergency they will submit to any terms that the crafty may impose on them. 21 This is precisely the evil that Art. 1602 seeks to guard against. The evident intent of the provision is to give the supposed vendor maximum safeguards for the protection of his legal rights under the true agreement of the parties.

    Article 1602, par. (1), accords significance to the gross inadequacy of the price of a purported sale to such an extent as to create the presumption that the transaction is an equitable mortgage.

    In the instant case, petitioners acquired the 240-square meter house and lot subject of the deed of sale for P78,000.00 in 1975. 22 The house was remodeled and converted into a two-storey residence in 1982 at the cost of P280,000.00. 23 From these figures, petitioners spent a total of P358,000.00 in acquiring the property and introducing improvements thereon. Yet, the property was purportedly sold to private respondents in 1985 for a measly P66,000.00, or barely 19% of its total acquisition and improvement cost three (3) years before, in 1982. 24 Certainly, no seller in his right senses would agree to part with his valuable property for such an unusually inadequate consideration.chanrob1es virtua1 1aw 1ibrary

    We take judicial notice of the fact that the value of real properties does not remain stagnant, but is on a constant upswing. Given the incessant currency devaluation and spiraling costs of commodities, it would certainly be unrealistic that the market value of petitioners’ property in 1985 would depreciate greatly three (3) years later.

    The rule is well-settled that a contract appearing on its face to be a definite sale, like the contract in question, may be interpreted as an equitable mortgage if any of the circumstances in Art. 1602 of the New Civil Code, such as the gross inadequacy of the price, is present.

    The other factor to consider is the continuous and unmolested physical possession of the contested property by petitioners for almost three (3) years, from the time of the alleged sale of the property in 1985 to the filing by petitioners of the case for annulment of the deed of sale in 1988. Although symbolically, the Deed of Absolute Sale transferred possession of the property to respondent Capistranos, it was petitioners, the supposed vendors, who remained in physical possession of the property. In fact, it does not even appear from the records that the Capistranos ever declared the property in their names for taxation purposes or paid taxes thereon since the execution of the document. Neither is there any showing that private respondents or any person acting in their behalf ever demanded of petitioners to vacate the premises after the "execution" of the "deed of sale" in their favor.

    Verily, had the intention of the parties been a contract of sale and not merely a contract of mortgage, private respondents could have asserted their right to possess the property, and would not have allowed petitioners to freely stay thereon for such a long period of almost three (3) years. Private respondents’ decision to eject petitioners from the property came only after the institution of this case by petitioners; obviously an afterthought, and designed merely to harass petitioners.

    Apart from the foregoing, a crucial circumstance reinforces our conclusion that the contested contract is not really a sale but an equitable mortgage: respondent Cecilia Capistrano’s admission during the trial that the title to the property was delivered to her by petitioners only to secure payment of the loans, thus —

    Atty. Mendez:chanrob1es virtual 1aw library

    On this "pagpapatunay" dated May 31, 1985 it is stated that plaintiffs shall pay you the amount of P120,000.00 on or before December 1985, did they offer you anything to secure the payment of this P120,000.00?

    A They offered to us their transfer certificate of title of their house and lot located at Las Piñas as security, sir. . . .

    Atty. Mendez:chanrob1es virtual 1aw library

    You stated that this Exh. "2" referring to Transfer Certificate of Title No. S-98043 covers the house and lot of the plaintiffs spouses Rolando and Rosita Cruz, is this the same house and lot subject matter of this case?

    A Yes, sir.

    Q You said that this certificate of title marked as Exh. "2" for the defendants Capistrano was offered to you as security for the payment of this P120,000.00, when did the plaintiffs give you this certificate of title?

    A On the same day that we gave them the amount of P120,000.00, sir (Emphasis supplied).25cralaw:red

    This admission of respondent Cecilia Capistrano all but demolishes whatever vestige of doubt is left as to the true nature of the contract in question. The evident intention of the parties, vis-a-vis petitioners’ property, was not to transmit ownership but merely to guarantee payment of the debt. In Lao v. Court of Appeals, 26 we held —

    . . . In determining the nature of a contract, the Court looks at the intent of the parties and not at the nomenclature used to describe it. Pivotal to deciding this issue is the true aim and purpose of the contracting parties as shown by the terminology used in the covenant, as well as "by their conduct, words, actions and deeds prior to, during and immediately after executing the agreement." In this regard, parole evidence becomes admissible to prove the true intent and agreement of the parties which the Court will enforce even if the title to the property in question has already been registered and a new transfer certificate of title issued in the name of the transferee.chanrob1es virtua1 1aw 1ibrary

    Indeed, all these circumstances, taken together, are familiar badges of an equitable mortgage. Private respondents could not in a pactum commissorium fashion appropriate the disputed property for themselves as they appeared to have done; otherwise, their act will not be countenanced by this Court being contrary to good morals and public policy hence void. If they wish to secure a perfect title over the mortgaged property, they should do so in accordance with law, i.e., by foreclosing the mortgage and buying the property in the auction sale.

    In the meantime, title to the subject property, which had supposedly been transferred to respondent Capistranos, actually remained with petitioners as owners-mortgagors, conformably with the well-established doctrine that the mortgagee does not automatically become the owner of the mortgaged property as the ownership thereof remains with the mortgagor. 27

    Moreover, we have ruled that in case of doubt in the circumstances surrounding the execution of a contract, as in this case, the least transmission of rights and interests shall prevail if the contract is gratuitous and, if onerous, the doubt shall be settled in favor of the greatest reciprocity of interests. In Labasan v. Lacuesta, 28 citing the 1909 case of Olino v. Medina, 29 we similarly held —

    Thus, in the early case of Olino v. Medina, 1909, Olino filed a complaint against Medina to recover a parcel of riceland which he alleged to have mortgaged for P175.00 and which Medina refused to return on the ground that the latter allegedly bought the property. In deciding the conflict of allegations between the parties, this Court, through Justice Florentino Flores, considered the transaction over the property as a loan, reasoning that "such contract involves a smaller transmission of rights and interests, and the debtor does not surrender all rights to his property but simply confers upon the creditor the right to collect what is owing from the value of the thing given as security, there existing between the parties a greater reciprocity of rights and obligations."cralaw virtua1aw library

    Ordinarily, findings of the Court of Appeals are entitled to great weight and respect, at times even finality, and shall not be disturbed on appeal. Nevertheless, when, as in this case, (a) the findings of fact of the Court of Appeals are at variance with those of the trial court; (b) the inference made or the conclusion drawn on the basis of certain state of facts is manifestly mistaken; or, (c) the Court of Appeals manifestly overlooked or disregarded matters of substance which, if considered, would very likely change the outcome of the case, this Court is not precluded from exercising its power of review. 30

    Anent the second issue, we are not inclined to completely sustain petitioners’ claim that their loan obligations to private respondents had been fully extinguished by payment, in the absence of adequate evidence to justify that conclusion. While we believe that petitioners exerted efforts to settle their indebtedness as they fell due, it is plain to us that they have not fully paid the subject loans.

    Private respondents insisted that not a single centavo of petitioners’ debt had been discharged by payment. Astute in the lending business and wise in the ways of men, it is not unreasonable to assume that private respondents kept track of all their monetary receivables, and the moment these became due their natural impulse would have been to immediately demand payment from their debtors. Curiously, we cannot discern from the records that private respondents ever demanded payment from petitioners. We are baffled by their silence and passivity despite the maturity of the questioned loans. Could it be that the Capistranos wanted the mortgaged property so badly that they simply allowed the loans to mature and thereafter instantly appropriated the property for themselves? Or, more plausibly, could it be that petitioners on the other hand somehow took pains to pay the loans little by little just to keep their end of the bargain, hence, giving no cause for private respondents to make demands?

    The truth appears to us to be somewhere in the middle. Veritas in medio stat. Petitioners only made payments of what were due but did not fully settle the debt. Private respondents have a valid and subsisting credit, not in the entire amount of the loans but only to the extent as will be discussed shortly hereafter.chanrob1es virtua1 1aw 1ibrary

    Let it be made clear that our judgment herein declaring the contract to be an equitable mortgage should not be construed as a bar to the collection of the unpaid loans. Private respondents have the perfect right to foreclose the mortgage and sell the property subject thereof to satisfy the mortgage debt. This brings us to the question of how much petitioners are actually liable to private respondents.

    The purchase price of P66,000.00 could not have just come out of nowhere and found its way into the deed of sale by chance or accident. Surely, the amount was placed in the Deed of Absolute Sale for a purpose, and could not have been merely dictated by the whim and caprice of the contracting parties. If, as asserted by private respondents, the contested house and lot subject of the deed of sale were given in payment of the loans, then why were they purportedly sold for only P66,000.00 and not for P195,000.00 or so, the total amount alleged to have been unpaid? We cannot conceive of any other credible explanation under the circumstances than that the alleged purchase price of P66,000.00 in the deed of sale actually pertained to the unpaid balance of the loans, for which private respondents appropriated petitioners’ property in full satisfaction thereof.

    WHEREFORE, the Decision of the Court of Appeals of 24 April 2000 is MODIFIED. The Registrar of Deeds of the City of Las Piñas is DIRECTED to cancel TCT No. (98729) T-2156-A issued in the name of private respondent spouses Miguel and Cecilia Capistrano and to issue a new title in the name of petitioner spouses Rolando and Rosita Cruz, subject to the equitable mortgage rights of private respondent spouses Miguel and Cecilia Capistrano.

    Petitioner Rolando and Rosita Cruz are ORDERED to pay private respondent spouses Miguel and Cecilia Capistrano the unpaid balance of the loans in the total amount of P66,000.00 with legal interest within ten (10) months 31 from the finality of this Decision; otherwise, the mortgaged property shall be sold at public auction to cover payment of the mortgage debt and the costs of suit.

    SO ORDERED.

    Quisumbing, Austria-Martinez and Tinga, JJ., concur.

    Callejo, Sr., J., took no part; signatory in assailed decision.

    Endnotes:



    1. Decision penned by Associate Justice Martin S. Villarama, Jr. concurred in by Associate Justices Cancio C. Garcia and Romeo J. Callejo, Sr. (now a member of this Court, hence, takes no part in this Decision.

    2. Actually a joint Decision penned by Judge Omar U. Amin, RTC-Br. 135, Makati City, in Civil Cases Nos. 88-2747 & 89-5682.

    3. Rollo, p. 74.

    4. Annex "A" for P120,000.00 and Annex "B" for P15,000.00; Records, pp. 52–53.

    5. TSN, 23 January 1990, pp. 7–9.

    6. Annex "C;" Records, p. 54.

    7. Annex "D;" id., p. 55.

    8. Annex "E;" id., p. 56.

    9. Exhs. "J" and "K;" Folder of Exhibits, pp. 10, 13.

    10. Exh. "L;" id., p. 16.

    11. TSN, 23 January 1990, p. 14.

    12. Raffled to RTC-Br. 135.

    13. See Civil Case No. 88-2747, "Rolando and Rosita both surnamed Cruz v. Miguel and Cecilia both surnamed Capistrano, San Miguel Corporation and the Register of Deeds of Las Piñas."cralaw virtua1aw library

    14. I.S. No. 88-10173; Exh. "M."cralaw virtua1aw library

    15. Civil Case No. 3016 for ejectment was raffled to MTC-Br. 79, Las Piñas, Metro Manila, presided over by Judge Alfredo R. Enriquez.

    16. Incidentally on 19 February 1991, SMC filed a motion to dismiss the complaint against it on the ground that respondents already replaced TCT No. 98729 with another collateral as security for their indebtedness to SMC. That with the replacement of the collateral, SMC no longer had anything to do with the contested property. In its Order of 14 April 1991, the trial court finally dismissed the complaint against SMC, with the conformity of petitioners.

    17. Petitioners challenged the jurisdiction of MTC-Br. 79, Las Piñas, Metro Manila, over the ejectment case. After Judge Alfredo R. Enriquez ruled against their objection, petitioners filed a petition for certiorari with application for preliminary injunction with RTC, Las Piñas, Metro Manila.

    18. Records, p. 734.

    19. Docketed as CA-G.R. CV No. 46049, Rolando and Rosita both surnamed Cruz v. The Honorable Alfredo R. Enriquez, Miguel and Cecilia both surnamed Capistrano.

    20. Rollo, p. 81.

    21. See Lao v. Court of Appeals, G.R. No. 115307, 8 July 1997, 275 SCRA 237, 253.

    22. TSN, 5 February 1991, p. 4.

    23. Id., p. 6.

    24. Petitioners’ claim that the property has a market value of P750,000.00 in 1985 would appear to be bloated. P750,000.00 could not be the price of the property at the time of the execution of the deed of sale, but it may be the price of the property AFTER the sale was executed.

    25. TSN, 20 August 1991, pp. 8–9.

    26. See Note 21.

    27. Art. 2088, New Civil Code, states: "The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any stipulation to the contrary is null and void."cralaw virtua1aw library

    28. No. L-25931, 30 October 1978, 86 SCRA 16.

    29. 13 Phil. 379, 382–383 (1909).

    30. See Castillo, Et. Al. v. Court of Appeals, G.R. No. 106472, 7 August 1996, 260 SCRA 375.

    31. In Montevirgen, Et. Al. v. Court of Appeals, Et Al., No. L-44943, 17 March 1982, 112 SCRA 641, we did not find objectionable the trial court decision of 1 July 1971 declaring the transaction to be an equitable mortgage, and fixing a period of ten (10) months from that date within which petitioners must pay their obligation with legal interest, otherwise execution would follow.

    G.R. No. 143388   October 6, 2003 - SPS. ROLANDO and ROSITA CRUZ v. COURT OF APPEALS, ET AL.


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