Blancia v. Calauor
REITERATIONFacts
The Antecedents: Respondent Lolita Tan Vda. de Calauor executed a Deed of Sale with Right of Repurchase in favor of petitioner Magdalena Blancia and her husband, Gilbert Blancia, on July 30, 1976, for a parcel of land with an area of 2,614 sq. m. for P2,216.00, with a reserved right to repurchase after one year. Procedural History: On March 2, 1989, petitioner filed a complaint seeking ownership and possession of the land, alleging that respondent failed to exercise her right to repurchase and unlawfully entered the property. Respondent claimed the transaction was a security for a loan, that she attempted to pay the loan but was refused, and that she eventually consigned the amount with the court. The Regional Trial Court ruled it was a sale with pacto de retro and respondent lost her right to redeem. The Court of Appeals reversed, declaring the contract an equitable mortgage. Petitioner's motion for reconsideration was denied. The Petition: Petitioner seeks review of the Court of Appeals' decision through a petition for certiorari.
Issue(s)
Whether the deed of sale with right to repurchase is a pacto de retro sale or an equitable mortgage.
Ruling
The petition is denied. The Supreme Court affirmed the decision of the Court of Appeals, ruling that the transaction was an equitable mortgage and dismissing the complaint.
Ratio Decidendi
On the issue of whether the deed of sale with right to repurchase is a pacto de retro sale or an equitable mortgage: The Supreme Court denied the petition, holding that the issue raised was factual and that the findings of the Court of Appeals, supported by substantial evidence, were conclusive and binding. The Court noted that despite the alleged sale with right to repurchase, the vendor (respondent) remained in possession of the property, and the Tax Declaration was not transferred to the vendee (petitioner). Furthermore, after the expiration of the redemption period, the vendee did not institute an action for consolidation of ownership. The complaint for recovery of ownership and possession was filed long after the expiration of the right to repurchase. The Court also highlighted that the respondent had tendered the loan amount to the petitioner, who refused to accept it, and the respondent subsequently consigned the amount with the trial court. These circumstances, taken together, led the Court of Appeals to correctly rule that the transaction was an equitable mortgage, not a sale with pacto de retro.
Main Doctrine
A deed of sale with right to repurchase, despite its terms, may be considered an equitable mortgage if certain circumstances indicate that the true intention of the parties was to secure a loan, such as the vendor remaining in possession, the tax declaration not being transferred, and the vendee not instituting an action for consolidation of ownership after the redemption period.