Borlaza v. Ramos
REITERATIONFacts
The Antecedents: Severino Pile, on behalf of himself and his siblings, executed a deed purporting to sell two parcels of land in Lilio, Laguna, to Isidro Borgonia and Gregorio Ramos for P200. The deed was on its face a sale with the right to repurchase. The vendees took possession of the respective parcels. Subsequently, the Piles repurchased the northern part from Isidro Borgonia for P100 and regained possession. Later, the Piles sold both parcels to spouses Leon Borlaza and Leoncia Borgonia. The spouses Borlaza then tendered P100 to Gregorio Ramos to repurchase the southern part, but Ramos refused, citing the expiration of the repurchase period. The spouses Borlaza deposited the P100 with the clerk of court. Gregorio Ramos executed an affidavit of consolidation of title. Procedural History: The spouses Borlaza filed an action praying that the deed be declared an equitable mortgage, that Ramos be compelled to accept the P100 for repurchase, and to deliver possession. The Court of First Instance of Laguna ruled that the instrument was a sale with the right to repurchase, that there was no agreement on the repurchase period, and that title consolidated in Ramos upon the expiration of four years from the execution of the instrument, the plaintiffs having lost their right to repurchase. This decision was affirmed by the Court of Appeals. The Petition: Petitioners claim that the application of estoppel against them was a question of substance not previously decided by the Supreme Court, and that the four-year period for repurchase was contrary to established jurisprudence.
Issue(s)
Whether the instrument executed by Severino Pile was a sale with the right to repurchase or an equitable mortgage. Whether Leon Borlaza, who acted as notary public and drew up the deed, is estopped from asserting that the instrument is an equitable mortgage. Whether the period for repurchase, in the absence of an express stipulation, is four years as provided by law, or if the phrase "from now and until the repurchase has not as yet (been) done" constitutes an express agreement on the repurchase period.
Ruling
The Supreme Court affirmed the judgment of the Court of Appeals. The instrument was held to be a sale with the right to repurchase. The period for repurchase, in the absence of an express stipulation, was determined to be four years from the date of execution of the instrument. Leon Borlaza was not technically estopped in the sense of precluding him from asserting the true nature of the instrument, but the term was used by the lower courts as an aid in weighing evidence and determining the parties' intent.
Ratio Decidendi
On the nature of the instrument: The Court held that the instrument was a sale with the right to repurchase, as it was clearly stated on its face. The Court found no ambiguity in the terms of the deed. The Court of Appeals' decision was based mainly upon the contents and terms of the deed itself. The Supreme Court stated that it was not at liberty to inquire into alleged badges of equitable mortgage as there was no finding by the Court of Appeals on these matters. On the issue of estoppel: The Court clarified that the "estoppel" applied by the lower courts was not in its technical sense as defined in the rules of court, which would preclude a party from asserting that an instrument is different from what it purports to be. Instead, the term was used by the courts below as an aid in weighing the evidence and determining the true character of the instrument and the intent of the parties. The Court found that the lower courts' reliance on the deed's contents was proper in discerning the parties' intent. On the period for repurchase: The Court found that there was no express agreement as to the time within which the repurchase should be made. The phrase "from now and until the repurchase has not as yet (been) done" was interpreted not as an express stipulation on the time for repurchase, but as a reservation of the right to repurchase itself. In the absence of such an express agreement, Article 1508, paragraph 1, of the Civil Code provides that the time for repurchase shall be four years from the date of the execution of the contract. The Court reiterated that the right to repurchase must be expressly stipulated, and an agreement to repurchase does not equate to an express stipulation on the time for repurchase.
Main Doctrine
In a contract of sale with a right to repurchase, if there is no express agreement as to the time for repurchase, the law supplies it by providing a period of four years from the date of the execution of the contract, as provided for in Article 1508, paragraph 1, of the Civil Code.