Lim v. Calaguas
REITERATIONFacts
The Antecedents: Petitioner Hermogenes C. Lim executed a notarial document (Exhibit A) transferring title to one-half of a residential lot and house in Meycauayan, Bulacan, to respondents Restituto L. Calaguas and Leonor Alcaraz, with a right to repurchase within one year. Lim contended that the contract was a loan with security, not a pacto de retro sale. Procedural History: The Court of First Instance of Bulacan ruled that the contract was an actual sale with reservation to repurchase. On appeal, the Court of Appeals affirmed this decision, finding the evidence insufficient to prove that the parties intended a contract different from a pacto de retro sale. The Petition: Lim sought review of the Court of Appeals' decision, insisting that the transaction was a loan and pointing to several circumstances: inadequate price, urgent need for money, vendor's continued possession, vendor's payment of land taxes, purchaser's acceptance of partial payments, the transaction originating from a loan, and the use of the word "sanglaan" by one of the respondents.
Issue(s)
Whether the contract executed between the parties is a pacto de retro sale or a mortgage. Whether the circumstances presented by the petitioner are sufficient to prove that the transaction was a loan disguised as a pacto de retro sale.
Ruling
The petition is dismissed, with costs. The Court of Appeals' decision is affirmed.
Ratio Decidendi
On the issue of whether the contract is a pacto de retro sale or a mortgage: The Supreme Court reiterated that in disputes of this nature, the pivotal inquiry is whether the circumstances show beyond doubt that the parties made a contract different from the express terms of the document they signed. The evidence must be clear, convincing, and satisfactory that the deal was a mortgage instead of a sale with pacto de retro. The Court emphasized that questions involving the determination of the intent of parties with respect to acts done by them are questions of fact. Consequently, the Supreme Court, in reviewing decisions of the Court of Appeals, should be confined to the facts and circumstances found by the appellate court, as these findings are given final character under the rules designed to speed up adjudication through a division of labor. The Court agreed with the Court of Appeals that the facts and circumstances in this case do not sustain the theory of the appellant that the transaction was a mortgage. The Court found it seriously to be doubted whether it could reverse the conclusion of the appellate court to the effect that those facts and circumstances are not "enough evidence" to show clearly that it was a mortgage instead of a conditional conveyance. This conclusion is obviously one of fact, not a bit different from the verdict of a jury in a murder trial that the circumstantial evidence presented by the prosecution has proved, or has not proved the accused had killed the deceased. On the sufficiency of circumstances to prove a loan: The Court of Appeals had already addressed the circumstances presented by Lim. Regarding the inadequacy of price, the appellate court found that the property was worth P2,000 and the sale price was P1,300, holding that this was not "grossly inadequate." The Court noted that inadequacy of price is immaterial unless it is grossly inadequate. The appellate court also declared that Lim was not in urgent need of money when he sold the property. Furthermore, the circumstances of the vendor remaining in possession and paying land taxes were found by the appellate court not to be incompatible with a veritable pacto de retro. The last two circumstances mentioned by Lim (purchaser accepting partial payments and the transaction originating from a borrowing) were not duly established according to the appellate court. The appellate court also found that while the word "sanglaan" was used in a letter by respondent Leonor Alcaraz, the evidence showed that this expression equally applied to conditional sales in that context. The Court also added that twelve percent interest being the legal rate, there was no reason to clothe the loan with the vestment of pacto de retro. Therefore, the Supreme Court concluded that the facts and circumstances found by the Court of Appeals did not sustain the theory of the appellant.
Main Doctrine
The Supreme Court will not disturb the findings of fact of the Court of Appeals, particularly on whether a contract is a pacto de retro sale or a mortgage, when such findings are supported by evidence and do not fall under any exceptions to the rule. The evidence must be clear, convincing, and satisfactory to prove that the parties intended a contract different from the express terms of the document signed.