Roberts v Papio| G.R. No.
166714 February 9, 2007 | a statute, nevertheless reveals the
Callejo, J. || by Jasper
FACTS:
● Sps. Martin and Lucina Papio – owner 274sqm lot in
Makati. They mortgaged the same lot to Amparo
investments for Php59K. They failed to pay, and the
co. filed a pet for extrajudicial foreclosure.
● To prevent the extrajudicial foreclosure they
executed a “Deed of Absolute Sale” April 13, 1982
in favor of Martin Papio’s cousin, Amelia Roberts.
For Php.85K (Php59K was paid to Amparao, Php26K
kept by the Sps.Papio). The loan with Amparo was
settled.
● They then executed a 2year contract of lease,
subject to renewal. With monthly rentals at 800.
● TCT was issued in the name of Amelia Roberts
● Papio paid rentals May1,1982 to May 1,1984 and
thereafter for another year.
○ He then failed to pay further rentals but he
remained in possession for almost
13years.
● Amelia Roberts sent a letter to Papio reminding him
to pay. Demand vacate if not settled in 15 days but
Papio refused to leave thus she filed an unlawful
detainer and damages against Papio MeTC Makati.
○ Roberts argues that she bought the land.
Appended Deed of Abs Sale and Lease
Contract
○ Papio: He had Right to
Repurcahse/Equitable Mortgage. He asked
Roberts to let him reacquire property, she
agreed, only then did he sign Deed of
absolute sale. Pursuant to that right, he
repurchased land for Php250K which he
gave to Perlita Ventura, Robert’s
representative in Phil. Since Roberts was
already in the US.
○ Robert’s Reply: She did not know about
the Php250K given to Ventura. She offered
to sell property to Papio in 1984 for US
$15K, but he refused.
● MeTC:
○ Odered Papio to vacate premises. Roberts
merely tolerated the stay of Papio after
the expiration of the contract. Right to
repurchase was not reserved by Papio
when he signed the Deed
● RTC affirmed
● CA reversed.
○ It was an equitable mortgage because he
retained ownership and its peaceful
possession.
ISSUES/RATIO:
1. WN the deed was an equitable mortgage? NO
a. Papio in his affidavits and position papers,
said that petitioner granted him the right
to repurchase and which he did in fact
exercise. This claim is antithetical to an
equitable mortgage.
b. An equitable mortgage is one that,
although lacking in some formality, form
or words, or other requisites demanded by
intention of the parties to change a real
property as security for a debt and contain
nothing impossible or contrary to law.
c. A contract between the parties is an
equitable mortgage if the following
requisites are present:
i. the parties entered into a
contract denominated as a
contract of sale; and
ii. the intention was to secure an
existing debt by way of mortgage.
iii. The decisive factor is the
intention of the parties.
d. Equitable Mortgage
i. the mortgagor retains ownership
over the property but subject to
foreclosure and sale at public
auction upon failure of the
mortgagor to pay his obligation.
e. Pacto de Retro
i. ownership of the property sold is
immediately transferred to the
vendee a retro subject only to the
right of the vendor a retro to
repurchase the property upon
compliance with legal
requirements for the repurchase.
The failure of the vendor a retro
to exercise the right to
repurchase within the agreed
time vests upon the vendee a
retro, by operation of law,
absolute title over the property.
f. Respondent is, thus, estopped from
asserting that the contract under the deed
of absolute sale is an equitable mortgage
i. right to repurchase presupposes
a valid contract of sale between
the same parties.
1. By insisting that he had
repurchased the
property, respondent
thereby admitted that
the deed of absolute
sale in fact and in law, a
deed of absolute sale
and not an equitable
mortgage; hence, he had
acquired ownership
over the property based
on said deed.
g. Villarica et al v. CA - The right of
repurchase must be reserved by vendor in
the same instrument of sale as one of the
stipulations of the contract.
i. This right was not reserved in the
Deed
h. NO documentary evidence showing that
Ventura was authorized to sell/resell land
at Php250K/receive said amount as
purchase price of the property thus
payment to Ventura was void.
RULING: IN LIGHT OF ALL THE FOREGOING, the petition is
GRANTED. The assailed Decision of the Court of Appeals in
CA-G.R. CV No. 69034 is REVERSED and SET ASIDE. The
Decision of the Metropolitan Trial Court, affirmed with
modification by the Regional Trial Court, is AFFIRMED.