Claravall v. Lim
REITERATIONFacts
The Antecedents: Respondents filed a Complaint for Consolidation of Ownership over a commercial lot and dwelling house against petitioner. Petitioner executed a Deed of Sale with Right of Repurchase on December 3, 1976, selling the properties for ₱250,000.00, with a reserved right to repurchase within two years from the date of sale. The deed stipulated that petitioner was obligated to give written notice to respondents six months before the expiration of the repurchase period, and failure to do so would result in respondents automatically becoming absolute owners. Petitioner failed to give the required written notice and did not repurchase the properties within the stipulated period. Procedural History: The Regional Trial Court (RTC) ruled in favor of the plaintiffs (respondents), declaring them absolute owners and petitioner to have waived her right to repurchase. The Court of Appeals (CA) affirmed the RTC decision. Petitioner appealed to the Supreme Court. The Petition: Petitioner sought to set aside the CA decision, arguing that the contract was an equitable mortgage, not a sale with right of repurchase. She claimed possession remained with her, her right to repurchase was extended, and respondents only paid a portion of the purchase price. She also argued for the application of Article 1606 of the Civil Code.
Issue(s)
Whether the issues raised by the petitioner are questions of fact beyond the scope of a petition for review on certiorari under Rule 45. Whether the contract executed between the parties is an equitable mortgage or a sale with right of repurchase. Whether petitioner is entitled to repurchase the property within 30 days from final judgment under Article 1606 of the Civil Code.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals, upholding the RTC's ruling that the contract was a sale with right of repurchase and that petitioner had waived her right to repurchase.
Ratio Decidendi
On the nature of the issues raised: The Court reiterated the well-settled rule that a petition for review on certiorari under Rule 45 is limited to questions of law, and the Court is not a trier of facts. It found that petitioner's assigned errors, concerning possession, extension of repurchase period, partial payment, and the nature of the contract as an equitable mortgage, were all factual in nature and thus beyond the Court's purview in a Rule 45 petition, absent any exceptions. On whether the contract is an equitable mortgage: The Court found no cogent reason to depart from the findings of the CA and RTC that the contract was a sale with right of repurchase. Petitioner failed to substantiate her claims that she remained in possession (the property was leased to Enrique Claravall), that her right to repurchase was extended (any extension must be express, not implied), or that the full purchase price was not paid. The Court noted that the deed was executed with the marital consent of petitioner's husband, and her oral claims were unsubstantiated and contradicted by the clear terms of the contract. The Court also found it inconceivable that a vendor a retro would sign a deed if the full consideration was not paid, and observed that petitioner never initiated an action to recover any alleged balance. On the applicability of Article 1606 of the Civil Code: The Court held that Article 1606, which allows repurchase within 30 days from final judgment, is intended for cases where the vendor a retro has a good faith belief that the contract was a mortgage. This belief must be founded on facts attendant to the execution of the sale. In this case, the Court found no honest doubt as to the parties' intention; the transaction was clearly a sale with right of repurchase. Allowing petitioner to repurchase would resurrect an expired right and alter the contractual stipulation, which was not the intent of the law. The Court emphasized that the rule should not be used to spawn fraud or reward bad faith by allowing a vendor a retro to simply institute an action to reform the contract after the repurchase period has expired.
Main Doctrine
A claim that a contract of sale with right of repurchase is an equitable mortgage must be substantiated by competent evidence. Mere allegations, especially when contradicted by the clear terms of the contract and the conduct of the parties, are insufficient. Furthermore, the benefit of Article 1606 of the Civil Code, allowing repurchase within 30 days from final judgment, is only available when there is an honest doubt as to the parties' intention and the vendor a retro had a good faith belief that the contract was a mortgage.