Heirs of VDA. de Sebua v. Bravante

 

Heirs of VDA. de Sebua v. Bravante

G.R. No. 244422

July 6, 2022

FACTS:

Respondent Feliciana Bravante averred that sometime in 1980, petitioner and her husband Exequeil Bravante mortgaged the subject land to a certain Recto. Recto demanded from the petitioner and Exequeil the payment of their loan in the amount of P5,000. Since they could not produce the amount, petitioner and Exequeil approached Feliciana and her husband to borrow P7,000, which was to be secured by the subject lot. Feliciana and her husband lent petitioner and Exequeil P7,000 by giving the P5,000 redemption price to Recto and the remaining P2,000 to petitioners and Exequeil. As an additional condition to the loan, Feliciana and her husband were allowed to actually possess and cultivate the subject land. Also, petitioners and Exequeil agreed that they will return the amount loaned upon demand. However, upon demand, petitioners and Exequeil failed to return the amount loaned. Instead, they made additional loans from Feliciana and her husband. Petitioners and Exequeil's loan reached P22,202. Since the amount of their loan had already exceeded the consideration of their mortgage contract, petitioner and Exequeil agreed to waive their rights to the subject land for the total consideration of P30,000.

ISSUE:

Whether the subject transaction was one of sale or an equitable mortgage.

HELD:

The subject transaction was one of an equitable mortgage. Article 1602 of the Civil Code enumerates instances when a contract is presumed to be an equitable mortgage: (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. The presence of even one of the circumstances in Article 1602 is sufficient to declare a contract as an equitable mortgage. Petitioner and her husband repeatedly took out loans from the respondent and her husband. They signed respondent's memoranda of the loans to satisfy their extreme financial needs. Respondent cannot use petitioner's failure to pay the loan due to her own machinations to claim ownership to the subject property. 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 commissorium. The mortgagor's default does not operate to automatically vest on the mortgagee the ownership of the encumbered property.