Claravall v. Lim

G.R. No. 152695 (July 25, 2011)

Victoria Claravall's petition was denied, affirming a missed Deed of Sale's validity.

Facts:

The case revolves around a Complaint for Consolidation of Ownership of Real Properties filed by Ricardo Lim, Roberto Lim, and Rogelio Lim (respondents) against Victoria Claravall (petitioner). The dispute originated from a Deed of Sale with Right of Repurchase executed on December 3, 1976, wherein Victoria Claravall sold a commercial lot and a dwelling house to the respondents for a consideration of P250,000.00. The deed stipulated that Victoria had the right to repurchase the properties within two years, provided she gave written notice to the respondents six months before the expiration of the repurchase period.

The respondents claimed that Victoria failed to give the required notice and did not attempt to repurchase the properties by the deadline of December 3, 1978. They argued that since the repurchase right was not exercised, they were entitled to consolidate ownership of the properties.

In her Answer with Counterclaim, Victoria denied the allegations and contended that the transaction was not a true sale but an equitable mortgage. She claimed that the respondents had only paid P150,000.00 of the purchase price and that she had remained in possession of the property, which indicated that the contract was intended as a mortgage rather than a sale.

The Regional Trial Court (RTC) ruled in favor of the respondents, declaring them the absolute owners of the properties and stating that Victoria had waived her right to repurchase. Victoria appealed the decision to the Court of Appeals (CA), which affirmed the RTC's ruling.

Legal Issues:

  1. Whether the property subject to the Deed of Sale with Right of Repurchase remained in the possession of the petitioner.
  2. Whether the respondents extended the period for the petitioner to exercise her right to repurchase.
  3. Whether the respondents had only partially paid the purchase price.
  4. Whether the Deed of Sale with Right of Repurchase should be considered an equitable mortgage.
  5. If the deed is a bona fide sale, whether the petitioner is entitled to exercise her right to repurchase within 30 days from the final judgment.

Arguments:

Petitioner’s Arguments:

  • The contract was an equitable mortgage, as she remained in possession of the property and the respondents retained part of the purchase price.
  • The respondents’ actions implied an extension of her right to repurchase.
  • The respondents had not fully paid the purchase price, which should invalidate the sale.
  • Even if the deed was a sale, she should be allowed to repurchase within 30 days of the final judgment based on Article 1606 of the Civil Code.

Respondents’ Arguments:

  • The transaction was a valid sale with a right of repurchase, and the petitioner failed to exercise her right within the stipulated period.
  • The petitioner did not provide written notice of her intent to repurchase, as required by the deed.
  • The evidence showed that the petitioner had received the full purchase price, and her claims of an unpaid balance were unsubstantiated.
  • The CA and RTC correctly concluded that the contract was not an equitable mortgage.

Court’s Decision and Legal Reasoning:

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that the findings of fact by the CA, which were consistent with the RTC's findings, were conclusive and binding. The Court emphasized that the issues raised by the petitioner were factual in nature and not appropriate for review under Rule 45.

The Court found no merit in the petitioner’s claims that the contract was an equitable mortgage. It reiterated that the circumstances cited by the petitioner, such as her possession of the property and the alleged unpaid balance, did not sufficiently establish that the transaction was intended as a mortgage. The Court noted that the deed was executed in accordance with legal formalities and that the petitioner had not provided credible evidence to support her claims.

Furthermore, the Court clarified that any extension of the right to repurchase must be explicitly documented, and the mere filing of a complaint by the respondents did not imply such an extension. The Court also highlighted that the provisions of Article 1606 of the Civil Code apply only when there is a bona fide belief that the contract was an equitable mortgage, which was not the case here.

Significant Legal Principles Established:

  • The distinction between a sale with a right of repurchase and an equitable mortgage is critical, and the burden of proof lies with the party alleging the existence of an equitable mortgage.
  • The right to repurchase must be exercised within the stipulated period unless an explicit extension is documented.
  • The findings of fact by lower courts are generally conclusive in petitions for review on certiorari, which are limited to questions of law.