G.R. No. 146651 – RONALDO P. ABILLA and GERALDA A. DIZON, petitioners, vs. CARLOS ANG GOBONSENG, JR. and THERESITA MIMIE ONG, respondents.
YNARES-SANTIAGO, J.
Rule Synopsis
The exercise of a right provided under Art. 1606, par. 3, i.e. the exercise of a vendor-a-retro’s right to repurchase within 30 days from a final judgment declaring the contract to be a pacto de retro sale is predicated on the good faith belief of said vendor that the subject contract is not a pacto de retro sale but something else, e.g. mortgage.
Facts
Carlos Gobonseng, Jr. and Theresita Ong (sellers) sold real estate to Ronaldo Abilla and Geralda Dizon (buyers). They executed a “Deed of Sale” and “Option to Buy.” The buyers bore the cost of said contracts. They asked for reimbursement but the sellers refused.
Thus, the buyers filed an action for specific performance, recovery of sum of money. In said action, the sellers raised the defense that their agreement was a mortgage and not a pacto de retro sale.
The RTC ruled in favor of the buyers, finding the subject contract to be a pacto de retro sale (they are entitled to reimbursement, it is generally the seller who bore the costs of the executing the contract), but ruled that the seller’s right to redeem had already prescribed. The CA affirmed. On motion for reconsideration, the sellers sought to exercise their right to redeem citing third paragraph of Art. 1606 giving the seller-a-retro the right to repurchase the property within 30 days from the final judgment declaring the contract to be a real pacto de retro sale (this issue was not raised on the trial court). This was denied.
The seller then filed an urgent motion to repurchase the lots in question with tender of payment before the RTC. The RTC denied. The SC affirmed.
Issue
May the sellers in a sale judicially declared as a pacto de retro, exercise the right of repurchase under Article 1606, third paragraph, of the Civil Code, after they have taken the position that the same was an equitable mortgage?
Ruling and Discussion
No. The sellers in a sale judicially declared as a pacto de retro may not exercise the right of repurchase under Article 1606, third paragraph, of the Civil Code, after they have taken the position that the same was an equitable mortgage.
In this case, the lower courts found that the subject transaction was truly a pacto de retro sale, but also that none of the circumstances under Article 1602 of the Civil Code exists to warrant a conclusion that it was an equitable mortgage, as argued by the sellers. Citing the CA, the SC noted that the sellers did not even made an attempt to consign the alleged loan upon the expiration of their right to repurchase.
Furthermore, the SC said that it was the consistent stand of the sellers that the subject transaction was an equitable mortgage, it cannot then, assert thereafter change its theory and seek an exercise of its right to repurchase. This is under the circumstances where the Court found nothing which will cast a doubt as to the real nature of the contract as pacto de retro.
The application of the third paragraph of Article 1606 is predicated upon the bona fides of the vendor a retro, that is, his belief that the contract was a mortgage was founded on facts attendant upon the execution of the sale with pacto de retro, honestly and sincerely entertained, that the agreement was in reality a mortgage, one not intended to affect the title to the property ostensibly sold, but merely to give it as security for a loan or other obligation. The reason was to prevent sellers from resurrecting at will an expired option to repurchase simply filing an action in court to reform the contract.
Dispositive
Petition denied. Decision set aside.