G.R. No. 166714 – AMELIA S. ROBERTS, petitioner, vs. MARTIN B. PAPIO, respondent.
CALLEJO, SR., J.
Rule Synopsis
A party who in his affidavit admits that a contract entered into by him was a pacto de retro sale will not later on the proceedings be allowed to change his stance. Furthermore, if the right to repurchase is not provided for in the original agreement, the latter cannot be construed to be a pacto de retro sale, but a mere promise to sell.
Facts
Spouses Martin and Lucina Papio (sellers-lessees) obtained loan from Amparo Investments Corporation (AIC) secured by a real estate mortgage on their property. They defaulted, and to prevent the foreclosure of the property, they sold it to Amelia Roberts (buyer-lessor). They executed a Deed of Sale and also and lease agreement, whereby the sellers lease the property back from the buyer, that is, so that they can remain in its possession. The buyer-lessor then went to USA and the sellers-lessees stopped paying rentals. The latter refused to pay despite demands. The buyer-lessor then demanded that they vacate the subjects property, lessees still did not heed.
Thus the buyer filed a complaint for unlawful detainer against the sellers.
As defense, the sellers-lessees claim that the agreement was sale with a right to repurchase, and that they were able to redeem the property by remitting the redemption price to the buyer’s agent in the Philippines, and that said agent misappropriated portion of said price. It also filed a separate civil case for specific performance under the alledge pacto de retro sale. Nonetheless, on appeal to CA, they raised the defense that the transaction was an equitable mortgage.
The MeTC ruled in favor of the buyer. It found, among others, that the subject contract of sale was absolute and unconditional and not one with a right to repurchase as argued by the sellers. It said that the right to repurchase is not a right granted to the seller by the buyer in a subsequent instrument but rather, a right reserved in the same contract of sale. The RTC affirmed. The CA reversed, finding that the contract between the parties was one of equitable mortgage.
Issue
Was the transaction entered into between the parties under the Deed of Absolute Sale and the Contract of Lease an equitable mortgage over the property?
Ruling and Discussion
No. The transaction entered into between the parties under the Deed of Absolute Sale and the Contract of Lease was not an equitable mortgage over the property.
The seller-lessee intransigently alleged in his answer, and even in his affidavit and position that the contract is a pacto de retro sale. This is evident in the letters presented. He even filed a complaint against the buyer in the RTC for specific performance. His claim that the buyer had given him the right to repurchase the property is antithetical to an equitable mortgage.
By insisting that he had repurchased the property, the seller thereby admitted that the deed of absolute sale executed by him and the buyer was, in fact and in law, a deed of absolute sale and not an equitable mortgage; hence, the buyer had acquired ownership over the property based on the said deed. This amounts to a judicial admission, and the seller is estopped from claiming otherwise. Given that the contract of sale was absolute in character, the seller must prove that his right to repurchase the property was granter thereafter. The seller failed to establish such a right.
The Court added: an agreement to repurchase becomes a promise to sell when made after the sale because when the sale is made without such agreement the purchaser acquires the thing sold absolutely and, if he afterward grants the vendor the right to repurchase, it is a new contract entered into by the purchaser as absolute owner. There is no evidence in this case that the buyer’s agent was authorized to enter into such a separate promise to sell. Even assuming there was such an agreement allowing the sellers to repurchase, the same will be void. Furthermore, there was no such perfected contract since what is shown on the records is the seller’s refusal to accept the buyer’s offer to sell the property.
Dispositive
Petition granted. Decision reversed and set aside.