AURORA P. CAPULONG vs.

THE COURT OF APPEALS

G.R. No. L-61337
June 29, 1984
FACTS:
Between November 19, 1964 and May 28, 1965, plaintiff-appellant Jovita Ponce Vda. de
Capulong obtained a series of loans from defendant-appellee Dr. Delfin Tolentino the
aggregate of which amounted to P16,250.00. The loans were secured by a continuing mortgage
on plaintiff's 950.3 square meter property.
Capulong failed to liquidate the mortgage upon maturity. Dr. Tolentino accepted her proposal
to sell to him the mortgaged property. On February 18, 1967, the notarial document of
absolute sale (now assailed as an equitable mortgage) was executed by Capulong whereby title
to the property in question was transferred to Dr. Tolentino for P21,300.00, which amount was
P1,000.00 more than Capulong's mortgage indebtedness. In another document, Capulong was
given an option to purchase the property on or before November 20, 1967, for the same price
of P21,300.00, Capulong failed to exercise the option in due time. Her efforts to secure an
extension of time proved futile. On January 28, 1968, Dr. Tolentino sold the land in question to
defendants spouses Ricardo G. Tolentino and Pilar de Joya in whose names it is now titled.\

Jovita Ponce Vda. de Capulong, predecessor-in-interest of the petitioners, filed the complaint
for annulment of usurious contracts, declaration of the deed of sale as an equitable
mortgage, reconveyance, and damages against respondent Delfin G. Tolentino.
The private respondents filed their answer alleging that the transactions adverted to are not
usurious and that the deed of absolute sale between them and Jovita Capulong is a true
and valid sale representing the real intention of the parties.

ISSUE:
Whether or not the "Pagbibilihang Tuluyan Ng Bakuran" should be treated as an equitable
mortgage and not the absolute sale it purports to be.
RULING:
ART. 1604. The provisions of article 1602 shall also apply to a contract purporting to be an
absolute sale.
Where any of the above circumstances defined in Article 1602 is present, a contract of sale
with right to repurchase is presumed to be an equitable mortgage. In practically all of the
so-called contracts of sale with right of repurchase, the real intention of the parties is that
the pretended purchase price is money loaned and in order to secure the payment of the
loan, a contract purporting to be a sale with pacto de retro is drawn up.
The added fact that Jovita Capulong remained in actual physical possession of the land and
enjoyed the fruits thereof confirms the real intention of the parties to secure the payment
of the loans with the land as security. The records show that the private respondents
waited for the period of redemption to expire before taking possession of the land. Had
the petitioners' mother really executed an absolute sale, the land which is the object of the
transaction should have been delivered to Tolentino and he would have assumed immediate
possession after the execution of the deed of sale.

SOLID HOMES, INC. vs. HON. COURT OF APPEALS

G.R. No. 117501
July 8, 1997
FACTS:
Solid Homes executed in favor of State Financing a Real Estate Mortgage on its properties in
order to secure the payment of a loan of P10M which the former obtained from the latter. Solid
Homes applied for an additional loan of P1.5M by State Financing, the credits secured by the
first mortgage on the Covered properties were increased to P11,5M. Sometime thereafter,
Solid Homes obtained additional credits from State Financing in the sum of P1,499M, the
mortgage executed on its properties was again amended so that the loans or credits secured
thereby were further increased from to P13,011,082.00.
When the loan obligations became due and payable, State Financing made repeated demands
upon Solid Homes for the payment thereof, but the latter failed to do so. State Financing filed
a petition for extrajudicial foreclosure of the mortgages.
Before the scheduled public auction sale, Solid Homes made representations and induced State
Financing to forego with the foreclosure. State Financing agreed to suspend the, subject to the
terms and conditions they agreed upon, they executed a document entitled memorandum of
agreement/dacion en pago.
o

In the event (Solid Homes) fails to comply with the provisions within a period of (180)
days, this document shall automatically operate to be an instrument of dacion en
pago without the need of executing any document to such an effect and (Solid Homes)
hereby obligates and binds itself to transfer to (State Financing), and (State
Financing) does hereby accept the conveyance the real properties, including all the
improvements thereon, free from all liens and encumbrances, in full payment of the
outstanding indebtedness.
(State Financing) hereby grants (Solid Homes) the right to repurchase the
aforesaid real properties, including improvements thereon, within (10) months
counted from and after the one hundred eighty (180) days from date of signing hereof at
an agreed price of P14,225,178.40, or as reduced pursuant to par. 5 (d), plus all cost of
money equivalent to 30% per annum, registration fees, real estate and
documentary stamp taxes and other incidental expenses incurred by (State
Financing) in the transfer and registration of its ownership via dacion en pago.

Solid Homes failed to pay State Financing an amount equivalent to 60% within 180 days from
the signing of the (Memo), as provided. State Financing registered the said (Memo) with the
Register of Deeds. Consequently, the said Register of Deeds cancelled TCTs in the name of Solid
Homes which were the subject matter of the (Memo), the said office issued Transfer Certificates
in the name of State Financing.
State Financing informed Solid Homes of the transfer and demanded the turn over of the
possession of the V.V. Soliven Towers II on two of the said properties.
A day before the expiry date of its right to repurchase Solid Homes filed the present action
against State Financing and the Register of Deeds seeking the annulment of the(Memorandum)
and the consequent reinstatement of the mortgages over the same properties.
The Trial Court held that the Memorandum /Dacion En Pago was valid and binding, and that
the registration was in accordance with law and the agreement of the parties.

ISSUE:
RULING:
o The only legal transgression of State Financing was its failure to observe the proper procedure in
effecting the consolidation of the titles in its name. But this does not automatically entitle the
petitioner to damages absent convincing proof of malice and bad faith on the part of private
respondent and actual damages suffered by petitioner as a direct and probable consequence
thereof. In fact, the evidence proffered by petitioner consists of mere conjectures and speculations
with no factual moorings. Furthermore, such transgression was addressed by the lower courts when
they nullified the consolidated of ownership over the subject properties in the name of respondent
corporation, because it had been effected in contravention of the provisions of Article 1607 20 of
the Civil Code. Such rulings are consistent with law and jurisprudence.
o Art. 1601. Conventional redemption shall take place when the vendor reserves the right to
repurchase the thing sold, with the obligation to comply with the provisions of article 1616 and
other stipulations which may have been agreed upon. (emphasis supplied)
o It is clear, therefore, that the provisions of Art. 1601 require petitioner to "comply with . . . the
other stipulations" of the Memorandum of Agreement/Dacion en Pago it freely entered into with
private respondent.
o Petitioner is right in its observation that the Court of Appeal's inclusion of "registration fees, real
estate and documentary stamp taxes and other incidental expenses incurred by State Financing in
the transfer and registration of its ownership was erroneous, considering that such transfer and
issuance of the new titles were null and void. Thus, the redemption price shall include only those
expenses relating to the registration of the dacion en pago, but not the registration and other
expenses incurred in the issuance of new certificates of title in the name of State Financing.
o In a contract of sale with pacto de retro, the vendee has a right to the immediate possession of the
property sold, unless otherwise agreed upon. It is basic that in a pacto de retro sale, the title and
ownership of the property sold are immediately vested in the vendee a retro, subject only to the
resolutory condition of repurchase by the vendor a retro within the stipulated period.

PRIMARY STRUCTURES CORP vs. SPS. ANTHONY S. VALENCIA

G.R. No. 150060
August 19, 2003
FACTS:
Petitioner is a private corporation and the registered owner of Lot in Cebu. Adjacent to the lot
of petitioner are parcels of land. The three lots have been sold by Hermogenes Mendoza to
respondent spouses sometime in December 1994. Petitioner learned of the sale of the lots only
in January, 1996, when Hermogenes Mendoza sold to petitioner one of the lots, a parcel also
adjacent to Lot belonging to the latter. Forthwith, it sent a letter to respondents, on 30 January
1996, signifying its intention to redeem the three lots. On 30 May 1996, petitioner sent
another letter to respondents tendering payment of the price paid to Mendoza by
respondents for the lots. Respondents, in response, informed petitioner that they had no
intention of selling the parcels. Thereupon, invoking the provisions of Articles 1621 and 1623,
petitioner filed an action against respondents to compel the latter to allow the legal
redemption. Petitioner claimed that neither Mendoza, the previous owner, nor respondents
gave formal or even just a verbal notice of the sale of the lots as so required by Article 1623 of
the Civil Code.
ISSUE: Whether Article 1621 and Article 1623 of the Civil Code applies.
RULING:
Article 1621 of the Civil Code expresses that the right of redemption it grants to an adjoining
owner of the property conveyed may be defeated if it can be shown that the buyer or grantee
does not own any other rural land. The appellate court, sustaining the trial court, has said that
there has been no evidence proffered to show that respondents are not themselves owners of
rural lands for the exclusionary clause of the law to apply.
Article 1623 of the Civil Code provides that the right of legal pre-emption or redemption shall
not be exercised except within thirty days from notice in writing by the prospective vendor, or
by the vendor, as the case may be. In stressing the mandatory character of the requirement,
the law states that the deed of sale shall not be recorded in the Registry of Property unless
the same is accompanied by an affidavit of the vendor that he has given notice thereof to all
possible redemptioners.
The Court of Appeals has equated the statement in the deed of sale to the effect that the
vendors have complied with the provisions of Article 1623 of the Civil Code, as being the
written affirmation under oath, as well as the evidence, that the required written notice to
petitioner under Article 1623 has been met. Respondents, like the appellate court, overlook the
fact that petitioner is not a party to the deed of sale between respondents and Mendoza and
has had no hand in the preparation and execution of the deed of sale. It could not thus be
considered a binding equivalent of the obligatory written notice prescribed by the Code.

DOMINICO ETCUBAN vs. THE HONORABLE COURT OF APPEALS

G.R. No. L-45164
March 16, 1987
FACTS:
Plaintiff inherited a piece of land with together with his co-heirs from their deceased father.
The Etcubans were declared as co-owners of the property in question. Thereafter the 11 coheirs executed in favor of defendants (private respondents herein) 11 deeds of sale of their
respective shares in the co-ownership for the total sum of P26,340.00. It is not disputed that the
earliest was made on December 9, 1963 and the last one in December 1967.
Dominico alleged that his co-owners leased and/or sold their respective shares without giving
due notice to him as a co-owner notwithstanding his intimations to them that he was willing
to buy all their respective shares. He further maintained that even upon inquiry from his coheirs/co-owners, and also from the alleged buyers he elicited nothing from them. Plaintiff
discovered for the first time the existence of these 11 deeds of sale during the hearing on
January 31, 1972, entitled Jesus C. Songalia vs. Dominico ETCUBAN. When he verified the
supposed sales with his co-owners only 3 of them admitted their respective sales. Hence, the
filing of Civil Case No. BN-109 by petitioner for legal redemption.
Defendants argued that plaintiff has no cause of petition against them; that the action is
barred by prescription or laches; that the complaint is barred Lis Pendens; that the provisions
of the law pertaining to legal redemption have been fully complied with in respect to the sale
of the disputed land to them; that plaintiff came to know of the sale of the land in question to
them in August, 1968 or sometime prior thereto; but on both occasions, no action was taken
by plaintiff despite the information plaintiff received from defendants thru his counsel and
that consequently plaintiff lost his right to redeem under Art. 1623 of the new Civil Code
because the right of redemption may be exercised only within 30 days from notice of sale and
plaintiff was definitely notified of the sale years ago as shown by the records.
ISSUE: Whether Petitioner complied with Art 1623 in his exercise of his right to redemption.
RULING:
Written notice was given to plaintiff in the form of an answer with counterclaim to the
complaint in Civil Case No. BN-109 which appears on the records to have been filed on March
18, 1972. Said court ruled that "this notice is sufficient to inform the plaintiff about the sale
and the reckoning date for the 30-day period commenced upon receipt thereof. No other
notice is needed under the premises because it is the substance conveyed rather than the form
embodying it, that counts.
The records reveal that on May 27, 1974, plaintiff-appellee deposited with the lower court the
amount of P26,340.00 the redemption price. Since the answer with counterclaim was filed on
March 18, 1972, the deposit made on May 27, 1974 was clearly outside the 30-day period of
legal redemption. The period within which the right of legal redemption or preemption may be
exercised is non-extendible.
While it is true that written notice is required by the law (Art. 1623), it is equally true that the
same "Art. 1623 does not prescribe any particular form of notice, nor any distinctive method
for notifying the redemptioner. "So long, therefore, as the latter is informed in writing of the
sale and the particulars thereof, the 30 days for redemption start running, and the
redemptioner has no real cause to complain.