PHILIPPINE SUPREME COURT JURISPRUDENCE

G.R. No. 102314 May 26, 1993

LEA O. CAMUS, Petitioner, vs. THE HONORABLE COURT OF APPEALS, CONRADO S. DAVID and DAVID MOTORS and MARKETING CORPORATION, respondents.

MELO, J.:

Both the trial and appellate courts construed the transaction effected between herein petitioner and private respondent on May 20, 1986 as an absolute sale of a piece of realty, but petitioner thinks otherwise, saying that it was a mere equitable mortgage. Hence, the petition at bar.chanroblesvirtualawlibrary chanrobles virtual law library

Respondent court briefly narrated the background of the case which petitioner did not bother to assail in her pleadings before this Court, thus:

On May 20, 1986, the parties, with plaintiff-appellant as vendor and defendant-appellee David Motors and Marketing Corporation (DMMC, for brevity) through its representative, defendant-appellee David, executed by and between themselves a "Deed of Absolute Sale of Real Property" over a parcel of land (Lot 7-B of the Subd. plan (LRC) psd-324403, approved as a non-subd. proj. being a portion of Lot 7 (LRC) Pcs-16468 LRC Rec. No. 5941), including all improvements thereon, situated in the barrio of Hen. T. de Leon, Municipality of Valenzuela, Metro Manila, containing an area of Six Hundred Thirty One (631) square meters, more or less, covered by Transfer Certificate of Title No. 119038 of the Registry of Deeds of Caloocan City, and for and in consideration of One Hundred Fifty Thousand (P150,000.00) Pesos (Exhibit "B" also Exhibit "2").chanroblesvirtualawlibrary chanrobles virtual law library

On November 27, 1987, plaintiff-appellant filed the instant complaint, praying for the annulment of the subject deed of absolute sale and consequent cancellation of the certificate of title obtained by defendants-appellees by virtue thereof; the interpretation and declaration of the subject deed of absolute sale as an equitable mortgage; and for a writ of preliminary injunction (Record, pp. 1-38).chanroblesvirtualawlibrary chanrobles virtual law library

In their answer, defendants-appellees, contended that the subject encumbrance was one of absolute sale (Record, pp. 51-70).chanroblesvirtualawlibrary chanrobles virtual law library

After trial on the merits, the lower court rendered the impugned decision . . . (p. 62, Rollo.)

In her memorandum, petitioner hastened to add a few more details on how the so-called sale in favor of private respondent evolved. According to petitioner, she previously mortgaged the same parcel of land on July 23, 1985 to Mrs. Macaria Dimafelis. Before the mortgage matured, she had to look for other sources from whom she can borrow money to liquidate the mortgage and this financial constraint led to her being introduced to Conrado S. David, herein private respondent, through one Natividad de Gula. It was in the office of private respondent where petitioner impressed that idea of utilizing the mortgaged lot as collateral for the loan which she wanted to obtain from private respondent.chanroblesvirtualawlibrary chanrobles virtual law library

In response to the request, private respondent allegedly agreed to extend the loan subject to the following terms: chanrobles virtual law library

a) the gross principal amount of the indebtedness shall be P150,000.00; chanrobles virtual law library

b) repayment period will be two years with an automatic grace period of one month; chanrobles virtual law library

c) interest shall ten percent a month payable monthly; chanrobles virtual law library

d) the transaction shall be denominated as an absolute sale instead of a real estate mortgage; and that chanrobles virtual law library

e) out of the proceeds of the loan, P40,000.00 will be retained by private respondent as payment for a two months advance interest (P30,000.00 at P15,000.00 interest a month) and the remaining sum of P10,000.00 will be for documentation expense.chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner claims that she was initially reluctant to express her conformity but she nonetheless agreed to the conditions after she was supposedly assured by private respondent that the nomenclature attached to their transaction was a mere formality and that petitioner had no reason to be apprehensive inasmuch as private respondent will register the deed of conveyance only if petitioner does not pay the monthly interest. Petitioner signed the "Deed of Absolute Sale" and surrendered the owner's duplicate copy of the certificate of title after private respondent issued a check in the amount of P109,000.00 to Mrs. Dimafelis as full settlement of petitioner's previous indebtedness. For her part, petitioner received P1,000.00 in cash and was made to sign a cash voucher to show that she received P150,000.00. Further, payment of the interest for four months was allegedly made to private respondent, who did not issue any receipt therefor, until petitioner discovered, to her dismay, that the instrument was registered which triggered the issuance of a new certificate of title in the name of respondent corporation.chanroblesvirtualawlibrary chanrobles virtual law library

All of the foregoing statements were derived by petitioner from her open court declarations when she sat on the witness stand in order to develop the theory that the entire scheme was a simple loan accommodation.chanroblesvirtualawlibrary chanrobles virtual law library

But the trial court was far from convinced by petitioner's disquisition and neither was respondent court which concurred with the factual observation of the court of origin that gross inadequacy of price had not been sufficiently demonstrated. In interpreting the covenant as an absolute transmission of dominion in favor of private respondent, Justices Aldecoa, Jr., Campos, and Felimon Mendoza were in unison when they declared that none of the badges of an equitable mortgage under Article 1602 of the Civil Code can be appreciated "in favor of herein petitioner (p. 68, Rollo).chanroblesvirtualawlibrary chanrobles virtual law library

Of particular significance to the resolution of the question on the true character of the disputed transaction are the contemporaneous and subsequent acts of the contracting parties which have been translated into testimonial evidence in the course of the trial on the merits. Indeed, this specie of evidentiary proof, known as the Parol Evidence Rule, may well be the acknowledged adjective norm that can spell the difference between successor failure of the instant petition (Macapinlac vs. Gutierrez Repide, 43 Phil. 770 [1922]: Cuyugan vs. Santos, 34 Phil. 100 [1916]). For there can be a better appreciation of the problem at hand only if we resort to what the parties had already emphasized below to buttress their respective contentions and in this respect, the decision of respondent court seems a bit deficient considering that it relied more on the alleged sufficiency of the purchase price (p. 66, Rollo) and the bare fact that petitioner, who was accompanied by her "businesswoman daughter", could not have been duped into accepting private respondent's offer to purchase the property (p. 67, Rollo).chanroblesvirtualawlibrary chanrobles virtual law library

We concede that on these two aspects, we do not occupy a superior position to brush aside what respondent court, arrived at but the so-called adequacy of the consideration, pegged at P150,000.00 by private respondent himself (p. 33, Rollo) for a 631 square meter lot, and the impression of petitioner's willingness to absolutely part with her possession, do not necessarily diminish the existence of other circumstances under Article 1602 of the Civil Code.chanroblesvirtualawlibrary chanrobles virtual law library

Verily, petitioner endeavored to demonstrate her financial constraint and the need to pay off the mortgage in favor of Mrs. Dimafelis, which she was able to rectify approaching Conrado S. David who offered to help thus:

ATTY. MABBAYAD, JR.: chanrobles virtual law library

Q. Mrs. Camus, are you the same Lea O. Camus who is the plaintiff in this case: chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Do you know the defendant Conrado S. David in this case? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Since when have you known him? chanrobles virtual law library

A. When I was introduced to him by an old woman, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. When was that? chanrobles virtual law library

A. The 1st week of May, 1986, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And what is the name of the lady who introduced you to him? chanrobles virtual law library

A. Natividad de Gula, sir.chanroblesvirtualawlibrary chanrobles virtual law library

COURT: chanrobles virtual law library

By the way, is she connected with this case? chanrobles virtual law library

ATTY. MABBAYAD., JR.: chanrobles virtual law library

I think so, your honor.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And why were you so introduced by Madam Natividad de Gula to the defendant Conrado S. David? chanrobles virtual law library

A. Because Natividad de Gula learned that I am in need of a loan.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And when for the first time did you come to know and become acquainted with Mrs. Natividad de Gula? chanrobles virtual law library

A. Later part of April, 1986, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. How did you came to meet her? chanrobles virtual law library

A. She went to our house, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. That was on the last week of April? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And when she went to your house, were, you there? chanrobles virtual law library

A. Yes, sir, I was.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Were you able to talk to each other?.chanroblesvirtualawlibrary chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. How did the conversation start and finish? chanrobles virtual law library

A. I am in need of a loan and she told me that she can help me and she knows somebody and that is Conrado David who can extend the loan to me, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Did she tell you how she came to know that you needed to borrow money? chanrobles virtual law library

A. She learned from another person, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And on the same occasion when you first met and talked to Ms. de Gula and she told you that she could help you obtain a loan from Mr. Conrado David, did she tell you her official or personal relationship with Mr. David? chanrobles virtual law library

A. According to her, she knows Mr. David and she used to bring borrowers to Mr. David, sir.

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ATTY. MABBAYAD, JR.: chanrobles virtual law library

Q. On that same occasion did Mrs. de Gula explain to you the terms and conditions that Mr. David, the lender to whom she brought many borrowers previously on the loan that he normally extends? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. What were those terms and conditions of the loan that was extended to you?

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WITNESS: chanrobles virtual law library

A. She asked me how much money do I need, if I have a title and complete papers, tax declarations, tax receipts.chanroblesvirtualawlibrary chanrobles virtual law library

ATTY. MABBAYAD, JR.: chanrobles virtual law library

Q. And what did you tell her? chanrobles virtual law library

A. She told me that Mr. David can give what I need, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And what did you tell her after she asked you whether you have a title or any supporting papers that you have in support of the loan? chanrobles virtual law library

A. That if it is necessary that she introduce me to Mr. David, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Now, why did you have to borrow money? chanrobles virtual law library

A. I badly needed money because I have an obligation.chanroblesvirtualawlibrary chanrobles virtual law library

Q. What kind of obligation? chanrobles virtual law library

A. I have a property mortgaged with Mrs. Macaria Dimafelis, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. The same property now subject of this case? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Now, did you in fact go and see Mr. David as suggested to you by Mrs. Natividad de Gula? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. When did you go and see Mr. David? chanrobles virtual law library

A. On May. 9, 1986, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And were you able to see Mr. David? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Whereat? chanrobles virtual law library

A. At their factory office at Dalandanan, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. In what municipality or city? chanrobles virtual law library

A. Valenzuela, Metro Manila, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And who were your companions when you went to see Mr. David at the said factory? chanrobles virtual law library

A. One of my daughters, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. How about Mrs. de Gula, was she with you then? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. What is the name of your daughter? chanrobles virtual law library

A. Ms. Paz Camus, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Now, when you went already in the office of Mr. David and saw him, what happened? chanrobles virtual law library

A. Mrs. de Gula introduced me to Mr. David and she told Mr. David what I needed, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. What specifically did Mrs. de Gula tell Mr. David about your so-called "pangangailangan" or need? chanrobles virtual law library

A. Mrs. de Gula told Mr. David that I needed a "sangla".chanroblesvirtualawlibrary chanrobles virtual law library

COURT: chanrobles virtual law library

Q. What do you mean by that? chanrobles virtual law library

A. That I needed a collateral to borrow money, ma'am.chanroblesvirtualawlibrary chanrobles virtual law library

ATTY. MABBAYAD, JR.: chanrobles virtual law library

Q. Did you need a collateral to borrow money or you needed money to be collateralized by a collateral? chanrobles virtual law library

A. That I needed to put up a collateral to get the money, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. In short you already have the collateral that you needed in order .. interrupted . . .chanroblesvirtualawlibrary chanrobles virtual law library

ATTY. FIDELINO: chanrobles virtual law library

Q. Objection, your Honor, very leading.chanroblesvirtualawlibrary chanrobles virtual law library

COURT: chanrobles virtual law library

Reform the question.chanroblesvirtualawlibrary chanrobles virtual law library

ATTY. MABBAYAD, JR.: chanrobles virtual law library

Q. After Mrs. de Gula explained to Mr. David your purpose in going to Mr. David, what did Mr. David say or comment? chanrobles virtual law library

A. He will first look into the property, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Did Mr. David ask you what kind of collateral you are willing to offer him to secure the loan you intended to obtain from him? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And what did you tell him? chanrobles virtual law library

A. I told him that the property is a house and lot located at No. 11 Gumamela St., Marulas, Valenzuela, Metro Manila.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And after you told Mr. David that, that was the time he said that he will first inspect the property being offered as collateral? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Did he ask you how much money you wanted to borrow from him? chanrobles virtual law library

A. He asked me, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And what did you tell him? chanrobles virtual law library

A. I told him P150,000.00, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Why do you need to borrow the amount of P150,000.00 from anybody? chanrobles virtual law library

A. For the payment of my obligation, sir.chanroblesvirtualawlibrary chanrobles virtual law library

COURT: chanrobles virtual law library

Q. The one you are mentioning, your obligation to Mrs. Dimafelis? chanrobles virtual law library

A. Yes, your Honor.chanroblesvirtualawlibrary chanrobles virtual law library

ATTY. MABBAYAD, JR.: chanrobles virtual law library

Q. How much is your obligation to Mrs. Dimafelis? chanrobles virtual law library

A. P109,000.00, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Since you needed only P109,000.00 and yet you borrowed P150,000.00, what do you intend to do with the remaining amount of the least P41,000.00? chanrobles virtual law library

A. To meet other needs and also to give commission to the person who helped me.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And did Mr. David or any of his agents or employees in fact inspect the proffered collateral as he said to you? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. When was that? chanrobles virtual law library

A. May 11 or 12, 1986, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And who made the inspection of the proffered collateral? chanrobles virtual law library

A. Mr. David himself, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. But in that, first meeting of yours with Mr. David, did he require you present to him or show to him any paper? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. What papers or documents did Mr. Conrado David require you to present or show to him? chanrobles virtual law library

A. Like the xerox copy of the title, declaration, tax receipts, plan or building permit.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Building or construction plan of what? chanrobles virtual law library

A. Of the house which I had constructed, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Where is this house so constructed? chanrobles virtual law library

A. At No. 11 Gumamela St. Marulas, Valenzuela, Metro Manila.chanroblesvirtualawlibrary chanrobles virtual law library

Q. You told the Court that you offered as collateral or security to the intended loan you are trying to obtain from Mr. David your house and lot located at No. 11 Gumamela St., do you have proof to show that you are the owner of the property? chanrobles virtual law library

A. Yes, sir, I have a xerox copy of my own title.

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ATTY. MABBAYAD, JR.: chanrobles virtual law library

Q. Were you there in your residence when Mr. David inspected the property which you offered as collateral? chanrobles virtual law library

A. Yes, sir, I was there.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And after Mr. David inspected the property, the proffered collateral, what did he say or do? chanrobles virtual law library

A. He told me to meet him in his office, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Did you in fact go to his office after Mr. David inspected the proffered collateral?.chanroblesvirtualawlibrary chanrobles virtual law library

A. Yes, sir, at Dalandanan.chanroblesvirtualawlibrary chanrobles virtual law library

Q. When was that? chanrobles virtual law library

A. May 15, 1986, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And did you have any companion when, you went there? chanrobles virtual law library

A. I have, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Who? chanrobles virtual law library

A. Mrs. de Gula and my daughter, Ma. Paz, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Were you able to see Mr. David on that date? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And did you talk about this loan with him? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. What happened when you talked about the loan you were trying to obtain for him? chanrobles virtual law library

A. HE TOLD ME THAT HE CAN GIVE ME THE MONEY PROVIDED I EXECUTED A DEED OF SALE.chanroblesvirtualawlibrary chanrobles virtual law library

COURT: chanrobles virtual law library

For how much? chanrobles virtual law library

A. For P150,000.00, ma'am.chanroblesvirtualawlibrary chanrobles virtual law library

Q. AND WHAT DID YOU TELL HIM? chanrobles virtual law library

A. I FELT SAD BECAUSE WHAT HE WANTED ME TO EXECUTE WAS A DEED OF SALE AND I SUGGESTED IF THE DOCUMENT THAT I WOULD EXECUTE WOULD BE AN ORDINARY LOAN DOCUMENT.chanroblesvirtualawlibrary chanrobles virtual law library

Q. WAIT, BEFORE HE SUGGESTED THAT YOU EXECUTE A DEED OF SALE. YOU SAID YOU WERE BORROWING. DID YOU NOT TALK ABOUT ANY INTEREST THAT YOU ARE GOING TO PAY? chanrobles virtual law library

A. WE TALKED ABOUT THE INTEREST MA'AM.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Before he asked you to execute a deed of sale? chanrobles virtual law library

A. Yes, ma'am.chanroblesvirtualawlibrary chanrobles virtual law library

Q. HOW MUCH? chanrobles virtual law library

A. 10% INTEREST, MA'AM.chanroblesvirtualawlibrary chanrobles virtual law library

ATTY. MABBAYAD, JR.: chanrobles virtual law library

Q. WHAT OTHER TERMS AND CONDITIONS DID MR. DAVID TALK WITH YOU ON THAT PARTICULAR SECOND OCCASION THAT YOU WENT TO HIM? chanrobles virtual law library

A. WE TALKED ABOUT THE LOAN, THAT HE IS AGREEABLE TO EXTEND THE LOAN WITH 10% INTEREST PROVIDED THAT THE DOCUMENT WOULD BE A DEED OF SALE. I TOLD HIM THAT WHY IS IT THAT IT IS A DEED OF SALE. AND HE TOLD ME THAT THAT IS HIS POLICY.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Now did you not talk about the repayment period for this loan? chanrobles virtual law library

A. We talked about the repayment, we agreed on a loan term payment of 2 years, and provided that 10% interest monthly be made.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Did you agree to those terms and conditions that Mr. David told you? chanrobles virtual law library

A. AT FIRST, I DO NOT WANT TO ACCEPT THE CONDITIONS BUT LATER ON, I AGREED BECAUSE I BADLY NEEDED HE MONEY.chanroblesvirtualawlibrary chanrobles virtual law library

Q. IN OTHER WORDS, YOU AGREED ON THE FOLLOWING: THAT THE DEED OF SALE COVERING THE PROFFERED COLLATERAL BE EXECUTED INSTEAD OF AN ORDINARY DEED OF REAL ESTATE MORTGAGE? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. NO OTHER CONDITION? chanrobles virtual law library

A. HE ALSO TOLD ME THAT+ HE WILL NOT HAVE THE DOCUMENT REGISTERED IN HIS NAME UNLESS OR IN CASE I WILL NOT BE ABLE TO PAY OR REDEEM THE PROPERTY AFTER THE LAPSE OF THE PERIOD, sir.

(pp. 3-18, TSN, January 26, 1988; Emphasis supplied.)

Petitioner continued to testify regarding her acquiescence to the terms and the disposition of the proceeds in this manner:

ATTY. MABBAYAD, JR.: chanrobles virtual law library

Q. In the last hearing of this case Madam Witness, you said hat Mr. David and you argreed on the amount of the loan and the terms and conditions thereof. After you so agreed with Mr. David, the amount, terms and conditions thereof, what transpired?.chanroblesvirtualawlibrary chanrobles virtual law library

A. He told me that he will have the documents prepared and will send cause the preparation of the deed of sale and requested me to bring more documents.chanroblesvirtualawlibrary chanrobles virtual law library

Q. What documents did Mr. David ask you to bring? chanrobles virtual law library

A. The copy of the title, tax declarations, tax receipts, the plan, the plan of the house and the building permit, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And after he told you that, did he tell you when you are going to meet again? chanrobles virtual law library

ATTY. FIDELINO: chanrobles virtual law library

Leading, your Honor, and no basis.chanroblesvirtualawlibrary chanrobles virtual law library

ATTY. MABBAYAD: chanrobles virtual law library

I will reform the question.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Was the deed of sale indeed prepared? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And were you able to bring the documents you just mentioned to Mr. David? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And when did you bring those documents to him? chanrobles virtual law library

A. 2 days after we talked, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. You agreed on the terms and conditions?

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And what happened when you submitted the documents required of you by Mr. David? chanrobles virtual law library

A. He took hold of the document but we will return to sign the deed of sale.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And did you go back to see him as he told you to do? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And did you sign the deed of sale that he caused to be prepared? chanrobles virtual law library

A. I signed the document, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. After signing the deed of sale caused to be prepared by defendant Conrado David, were you given a copy thereof? chanrobles virtual law library

A. No, sir.

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Q. Since you already signed the document and submitted the documents already requested of you, did he give you the amount? chanrobles virtual law library

A. Not yet, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Why? chanrobles virtual law library

A. Because I fetched first the person to whom I have an obligation.chanroblesvirtualawlibrary chanrobles virtual law library

Q. What is the name of that person? chanrobles virtual law library

A. Mrs. Macaria Dimafelis, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Were you able to fetch Mrs. Macaria Dimafelis? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Where did you bring her? chanrobles virtual law library

A. To the office of Mr. David, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. When was that in relation to the deed of sale which you signed, Exhibit A and A-1? chanrobles virtual law library

A. May 19, 1986, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And when you and Mrs. Dimafelis went to the office of Mr. David were you able to see him? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Who were with you when you went to the office of Mr. David on May 19, 1986? chanrobles virtual law library

A. My daughter Josefina and also Ma. Paz.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Nobody else? chanrobles virtual law library

A. And Mrs. Natividad de Gula and also the agent.chanroblesvirtualawlibrary chanrobles virtual law library

Q. What happened when you and your other companions met in the office of Mr. David on the particular date? chanrobles virtual law library

A. Mr. David asked for the title in possession of Mrs. Dimafelis, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Did Mrs. Dimafelis give the title to Mr. David as he requested? chanrobles virtual law library

A. Yes, sir, it is complete.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And after Mrs. Dimafelis handed over the title to Mr. David, what also happened? chanrobles virtual law library

A. Mr. David prepared the check for Mrs. Dimafelis, sir.chanroblesvirtualawlibrary chanrobles virtual law library

COURT: chanrobles virtual law library

Q. How much? chanrobles virtual law library

A. P109,000.00, ma'am.chanroblesvirtualawlibrary chanrobles virtual law library

ATTY. MABBAYAD: chanrobles virtual law library

Q. Now, you said earlier Madam, that you and Mr. David agreed on a preferred amount of loan of P150,000.00. My question to you is, was the said amount of P150,000.00 given to you Mr. David?

A. No, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Why?

A. WHAT WAS GIVEN BY MR. DAVID WAS ONLY P109,000.00 IN FACT WHICH WAS RECEIVED AND SIGNED BY MRS. DIMAFELIS AND ANOTHER P1,000.00 IN CASH.

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ATTY. MABBAYAD: chanrobles virtual law library

Q. Now, you said earlier that you and Mr. David agreed on a loan in the amount of P150,000.00 and you said just now that what actually was given by Mr. David was P109,000.00 in the form of check issued and delivered to Macaria Dimafelis in the amount of P109,000.00 and P1,000.00 cash which he gave you. WHAT HAPPENED TO THE BALANCE OF P40,000.00?

A. MR. DAVID SAID THAT IT WOULD BE USED FOR DOCUMENTATION AND FOR 2 MONTHS ADVANCE INTEREST.chanroblesvirtualawlibrary chanrobles virtual law library

Q. DID HE TELL YOU THE BREAKDOWN OF THE APPLICATION OF THE AMOUNT OF P40,000.00?

A. NO MORE, sir.chanroblesvirtualawlibrary chanrobles virtual law library

(pp. 3-5, 7-10, 12, TSN, April 7, 1989; Emphasis supplied.)

To the question of whether petitioner agreed to an outright sale, she emphasized a vehement denial on June 15, 1989:

ATTY. MABBAYAD: chanrobles virtual law library

Q. Mrs. Camus, when Mr. Conrado S. David testified as the first and only witness for the defendants, he said that although initially the transaction you approached (?) to him was one of a loan, eventually and finally it became an outright sale and that you sold the property to him for and in consideration of the price of P150,000.00. What can you say about this testimony of Mr. Conrado David? chanrobles virtual law library

A. OUR TRANSACTION WITH HIM IS A LOAN FOR THE AMOUNT OF P150,000.00, SIR, WHEN WE APPROACHED HIM, WE REALLY INTENDED TO HAVE A LOAN WITH MORTGAGE AND THEN WHEN I ASKED HIM FOR THE AMOUNT OF P150,000.00 FOR A LOAN, HE SAID WHY IS IT BIG AND ASKED ME HOW MUCH IS THE PRICE PER SQ. METER AND I ANSWERED P500.00.chanroblesvirtualawlibrary chanrobles virtual law library

COURT: chanrobles virtual law library

Q. YOU AGREED TO A SALE?

A. I DID NOT AGREE TO A SALE AND OUR AGREEMENT IS ONLY FOR A LOAN WITH MORTGAGE AND HE SAID IF HE IS GOING TO PREPARE A DEED, OF SALE, IT IS ONLY FOR PURPOSES OF FORMALITY, MA'AM.chanroblesvirtualawlibrary chanrobles virtual law library

(pp. 2-3, TSN, June 15, 1989; Emphasis supplied.)

The foregoing narration was corroborated by petitioner's daughter who declared:

ATTY. MABBAYAD: chanrobles virtual law library

Q. And before leaving what did Mr. David tell your mother, if any, after inspecting your property? chanrobles virtual law library

A. He told us to go to his office again so that we could talk, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Did your mother go to Mr. David's office as he instructed? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

COURT: chanrobles virtual law library

Q. Alone? chanrobles virtual law library

A. Together with Aling Naty and me, ma'am.chanroblesvirtualawlibrary chanrobles virtual law library

Q. When? chanrobles virtual law library

A. The following day, ma'am.chanroblesvirtualawlibrary chanrobles virtual law library

ATTY. MABBAYAD: chanrobles virtual law library

Q. That could be about May 10, 1986? chanrobles virtual law library

A. Yes , sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And were you and your mother and the other members of your group able to talk to Mr. David when he instructed your mother to see him in his office? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Who talked to Mr. David on that particular occasion? chanrobles virtual law library

A. My mother, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Were you present? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. What about Natividad de Gula? chanrobles virtual law library

A. She was also there but she is outside the office, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And what did Mr. David and your mother talk about? chanrobles virtual law library

A. He said he is AMENABLE IN GRANTING THE P150,000.00 LOAN TO MY MOTHER BUT MY MOTHER WILL ONLY GET P110,000.00 BECAUSE THE REST WILL BE FOR THE DOCUMENTATIONS AND FOR THE ADVANCE INTEREST.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Did Mr. David tell your mother how much is for documentation?

A. P10,000.00. sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And did Mr. David tell your mother how much would be deducted from the agreed gross amount of the loan for the advance interest?

A. P30,000.00, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. How much interest was finally agreed upon between Mr. David and your mother? chanrobles virtual law library

A. 10% per month, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And aside from the amount of the loan and the rate of interest agreed upon by your mother and Mr. David, were there other terms and conditions imposed on by Mr. David?

COURT: chanrobles virtual law library

Is there no written agreement? chanrobles virtual law library

ATTY. MABBAYAD: chanrobles virtual law library

None, your Honor.chanroblesvirtualawlibrary chanrobles virtual law library

COURT: chanrobles virtual law library

Alright.chanroblesvirtualawlibrary chanrobles virtual law library

WITNESS: chanrobles virtual law library

A. He told my mother that the DOCUMENT TO BE EXECUTED IS A DEED OF SALE, INSTEAD OF A DEED OF REAL ESTATE MORTGAGE, sir.chanroblesvirtualawlibrary chanrobles virtual law library

ATTY. MABBAYAD: chanrobles virtual law library

Q. What about other terms of payment or period of payment of the loan that was agreed upon between him and your mother? chanrobles virtual law library

A. To be paid in 2 years, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. WHEN MR. DAVID TOLD YOUR MOTHER THAT THE TRANSACTION WOULD BE DOCUMENTED AS A DEED OF SALE NOT AN ORDINARY COLLATERALIZED DOCUMENT AS A DEED OF REAL ESTATE MORTGAGE, WHAT, DID YOUR MOTHER TELL HIM?

A. MY MOTHER TOLD HIM THAT COULD IT BE POSSIBLE THAT INSTEAD OF A DEED OF SALE A DEED OF REAL ESTATE MORTGAGE WOULD BE EXECUTED BECAUSE IF THE DOCUMENT WOULD BE A DEED OF SALE, IT IS DANGEROUS.chanroblesvirtualawlibrary chanrobles virtual law library

Q. AND WHAT DID MR. DAVID REPLY TO YOUR MOTHER?

A. HE SAID THAT THAT IS HIS POLICY.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And what did your mother finally decide? chanrobles virtual law library

A. My mother told him that we will first talk about it, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. When you used the word "namin", to whom in particular was your mother referring? chanrobles virtual law library

A. We, sir: my mother, myself and my sister.chanroblesvirtualawlibrary chanrobles virtual law library

Q. You are referring to your other sister Josefina? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. Going back to the rate of interest, when Mr. David told your mother that the rate of interest would be 10% per month, did your mother accept that condition of Mr. David? chanrobles virtual law library

ATTY. FIDELINO: chanrobles virtual law library

Already answered, your Honor. The answer is "We would talk about the matter".chanroblesvirtualawlibrary chanrobles virtual law library

ATTY. MABBAYAD: chanrobles virtual law library

Referring to the documentation, this is a different matter, your Honor.chanroblesvirtualawlibrary chanrobles virtual law library

COURT: chanrobles virtual law library

Answer.chanroblesvirtualawlibrary chanrobles virtual law library

WITNESS: chanrobles virtual law library

A. She did not readily agree because she said we would talk about it first, your Honor.chanroblesvirtualawlibrary chanrobles virtual law library

ATTY. MABBAYAD: chanrobles virtual law library

Q. You would like to tell the Honorable Court that in that second meeting that you and your group had with Mr. David nothing definite yet was arrived at or agreed upon? chanrobles virtual law library

A. None, sir, because of that deed of sale.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And since there was no meeting of the minds on that particular second meeting, was there another meeting between you and your group and Mr. David? chanrobles virtual law library

A. Yes, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. When was that? chanrobles virtual law library

A. That was about May 19, I am not so sure about the date, sir.chanroblesvirtualawlibrary chanrobles virtual law library

Q. And when you returned, using the word "you" in the Plural form, to David, regarding this transaction, were you able to talk to Mr. David, using the word "you" to plural form?

xxx xxx xxx chanrobles virtual law library

Q. On that particular third time what did Mr. David and your mother talk about? chanrobles virtual law library

A. MY MOTHER THEN REQUESTED MR. DAVID IF IT COULD BE POSSIBLE THAT INSTEAD OF A DEED OF SALE A DEED OF REAL ESTATE DOCUMENT WOULD BE EXECUTED BUT HE SAID HE CANNOT DO ANYTHING AND HE ALSO TOLD US NOT TO WORRY BECAUSE AS LONG AS WE CAN PAY THE MONTHLY INTEREST, HE WOULD NOT HAVE THE DEED OF SALE REGISTERED, sir.

xxx xxx xxx chanrobles virtual law library

Q. IN SHORT, WHEN MR. DAVID REFUSED TO GRANT THE REQUEST OF YOUR MOTHER WITH RESPECT TO THE MANNER OF DOCUMENTATION OF THE TRANSACTION AND THE RATE OF INTEREST, WHAT HAPPENED?

A. MY MOTHER FINALLY AGREED BECAUSE WE ARE REALLY IN NEED OF MONEY, sir.chanroblesvirtualawlibrary chanrobles virtual law library

(pp. 14-22, TSN, December 8, 1988; Emphasis supplied.)

On the other end of this controversy is private respondent's indifference throughout his comment (p. 81, Rollo) and memorandum as well (p. 200, Rollo) vis-a-vis the clarification made by petitioner herself and petitioner's daughter which unconcerned and nonchalant attitude inevitably leads to the conclusion that petitioner had established her onus probandi by a preponderance of evidence and that private respondent had failed to prove his positive allegations in support of his stance (Section 1, Rule 131, Revised Rules on Evidence). Apart from this procedural axiom is our belief that private respondent's demeanor in retaining a portion of the alleged purchase price, as advance interest for two months, is akin to it has precisely the very circumstance mentioned by Article 1602(4) of the Civil Code that will warrant the legal presumption of an equitable mortgage. Besides, it was erroneous for respondent court to have made a sweeping insinuation that it was petitioner as vendor who suggested the "purchase price" and is thus precluded from assailing the sufficiency thereof (p. 66, Rollo), on account of the admission in judicio of private respondent that it was he who "placed the value of P150,000.00" as consideration on the document (p. 33, Rollo; TSN, April 6, 1989, pp. 8-11). The fact that petitioner was accompanied by her "businesswoman daughter" to the office of private respondent is of no practical bearing because even persons of average intelligence invariably find themselves in no position whatsoever when bargaining with their creditor (Cabigao vs. Sales, et al., (C.A.) 51 O. G. 5265; 5 Tolentino, Commentaries and Jurisprudence on the Civil Code 1959 edition, p. 137) such as private respondents corporation whose primary business concern includes giving loans (TSN, March 30, 1989, pp. 8-10; p. 32, Rollo). Moreover, it may be recalled that petitioner only received the sum of P1,000.00 out of the P150,000.00 alleged as consideration for the "sale" (p. 18, supra). Such a measly sum is certainly another circumstance that reinforces our belief 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 in her pocket as certification therefor.chanroblesvirtualawlibrary chanrobles virtual law library

At any rate substantive law mandates that a contract forfeited to be venta con facto de retro or an outright to be construed as an equitable mortgage for it involves a smaller transmission of rights (Olino vs. Molina, 13 Phil. 379 (1909); Villa vs. Santiago, 38 Phil. 157 (1918); 5 Tolentino, supra, at p. 15). Moreover, there is no doubt that petitioner agreed to the execution of the so-called sale in favor of private respondent because of the urgent necessity for money of the apparent vendor to liquidate her indebtedness to Mrs. Dimafelis (Claravall vs. Court of Appeals, 190 SCRA 439 (1990); Labasan vs. Lacuesta, 86 SCRA 16 (1978). This is another circumstance where it may be fairly inferred that the real intention of the parties is for the transaction to secure the payment of a debt or the performance of any other obligation (Article 1602 (6), New Civil Code).chanroblesvirtualawlibrary chanrobles virtual law library

WHEREFORE, the decision of respondent court dated October 10, 1991 is hereby SET ASIDE. The deed of absolute sale executed by Lea O. Camus in favor of Conrado S. David is hereby declared as an equitable mortgage and, petitioner is declared entitled to redeem the property. Private respondent is hereby ordered to execute the necessary deed of conveyance upon full payment of the total amount of P110,000.00 with legal interest from May 20, 1986, the time the loan matured until it is fully satisfied.chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.