Avila v. Barabat
REITERATIONFacts
The Antecedents: The subject of the controversy is a portion of a 433-square meter parcel of land registered in the name of Anunciacion Bahena vda. de Nemeño. Upon her death, ownership transferred to her five children, including petitioners Narcisa Avila and Jose Bahena, and respondents' lessors. Respondents Benjamin and Jovita Barabat leased a portion of Avila's house on the lot in 1964 and moved in together in 1969. In July 1979, Avila, who had relocated, offered to sell her house and share in the lot to her siblings, but no one was interested. She then offered it to respondents, who agreed to buy it for P8,000.00, evidenced by a private document dated July 17, 1979. Respondents stopped paying rentals and took possession as owners, also assuming realty tax payments. Procedural History: In early 1982, petitioner Januario Adlawan informed respondents that they had to vacate Avila's place as he was buying the property. Respondents showed him the July 17, 1979 document. On January 6, 1983, respondents received a letter stating Avila had sold her share to spouses Januario and Nanette Adlawan. Respondents filed a complaint for quieting of title, annulment of the deed of sale to the Adlawans, specific performance, partition, and damages. The RTC ruled in favor of respondents, declaring Exhibit "A" (the private document) a valid deed of sale, nullifying the sale to the Adlawans, ordering Avila to execute a formal deed of sale, and holding petitioners liable for damages and attorney's fees. The Court of Appeals affirmed the RTC decision. Petitioners' motion for reconsideration was denied, leading to this petition. The Petition: Petitioners claim the appellate court erred in ruling the transaction an absolute sale, not an equitable mortgage, citing Article 1602 in relation to Article 1604 of the Civil Code due to continued possession of realty taxes and alleged gross inadequacy of consideration. They also claim error in denying their right to redeem and in ruling implied partition.
Issue(s)
Whether the private document dated July 17, 1979, constitutes an absolute sale or an equitable mortgage. Whether petitioners, as former co-owners, have a right of redemption over the property sold by Avila to respondents. Whether the co-ownership among the siblings had been extinguished by partition.
Ruling
The petition is denied. The July 30, 1999 decision and January 19, 2000 resolution of the Court of Appeals are affirmed.
Ratio Decidendi
On whether the private document constitutes an absolute sale or an equitable mortgage: The Court ruled that for Articles 1602 and 1604 to apply, two requisites must concur: (1) the parties entered into a contract denominated as a contract of sale, and (2) their intention was to secure an existing debt by way of mortgage. Both the trial and appellate courts found that Exhibit "A" evidenced a contract of sale and that Avila intended the agreement to be a sale. The subsequent acts of Avila, particularly her attempt to change the agreement only after her siblings protested the sale, revealed her intention to absolutely convey the property. Contrary to petitioners' claim, the trial court found that respondents took over the payment of real property taxes after the execution of Exhibit "A," a factual finding binding on the Supreme Court. The claim of gross inadequacy of consideration also lacked basis as petitioners failed to present evidence of the correct price at the time of the sale. On whether petitioners have a right of redemption: The Court held that petitioners' reliance on Article 1623 in relation to Article 1620 of the Civil Code was incorrect. The right of redemption of co-owners exists only if co-ownership is present at the time of conveyance and redemption demand. Petitioners admitted they were no longer co-owners when the property was sold in 1979, as the co-ownership had already been extinguished by partition. On whether co-ownership had been extinguished by partition: The Court explained that every act intended to put an end to indivision among co-heirs is deemed a partition. Petitioners, in their amended answer, admitted that their respective shares in the lot had been physically segregated, although there was no formal partition. This judicial admission was conclusive. By segregating and taking possession of their respective shares, the co-ownership was legally dissolved, extinguishing any right of legal redemption among former co-owners. The provision on the right of adjoining owners (Article 1622) was also found inapplicable as its conditions were not met and the issue was not raised.
Main Doctrine
The Court affirmed the Court of Appeals' ruling that the transaction evidenced by a private document was an absolute sale, not an equitable mortgage, and that the petitioners were not entitled to the right of redemption as co-owners because co-ownership had been extinguished by partition.