Vda. de Alcantara v. CA

G.R. No. 114762 (January 29, 1996)

Facts:

The case revolves around a dispute concerning two lots covered by Transfer Certificate of Title No. 19232, originally owned by Leona C. vda. de Alfonso. The title was co-owned by Leona and Ernesto Alcantara, who was married to Rebecca Desamito, and Gerondina Alcantara. The plaintiffs, who are the private respondents, claimed ownership of a half undivided portion of the lots based on a "Pacto de Retro Sale" executed on September 7, 1983, for a consideration of P100,000. The plaintiffs contended that the vendor-a-retro, Leona, failed to redeem the property within the stipulated three-month period.

The defendants, including Rebecca Desamito and Gerondina Alcantara, contested the validity of the sale, arguing that Leona was not the rightful owner of the property at the time of the sale due to a prior "Deed of Extra-Judicial Partition" executed in 1972, which they claimed transferred ownership of the property to them. They further asserted that the sale was, in fact, an equitable mortgage rather than a true sale.

The trial court found in favor of the plaintiffs, declaring the transaction a valid sale with a right to repurchase and ordering the partition of the property. The defendants appealed the decision to the Court of Appeals, which affirmed the trial court's ruling but deleted the award for attorney's fees.

Legal Issues:

1. Whether the "Pacto de Retro Sale" executed by Leona C. vda. de Alfonso was valid despite the defendants' claim of prior ownership.
2. Whether the transaction should be classified as a sale with a right to repurchase or as an equitable mortgage.
3. The effect of the registration of the Deed of Extra-Judicial Partition on the validity of the sale.

Arguments:

• Petitioners' (Defendants') Arguments:

  • The sale was null and void because Leona was not the owner of the property at the time of the transaction.
  • The transaction should be considered an equitable mortgage, as the vendor-a-retro remained in possession of the property.
  • The unregistered pacto de retro sale cannot prevail over a duly recorded partition agreement.

• Respondents' (Plaintiffs') Arguments:

  • The sale was valid as Leona was the rightful owner at the time of the sale, and the defendants failed to prove otherwise.
  • The evidence showed that the transaction was a true sale with a right to repurchase, not an equitable mortgage.
  • The registration of the Deed of Extra-Judicial Partition did not affect the validity of the pacto de retro sale since it was not a valid conveyance of ownership.

Court's Decision and Legal Reasoning:

The court upheld the trial court's decision, affirming that the pacto de retro sale was a valid transaction. The court reasoned that the evidence presented by the plaintiffs demonstrated that Leona was the owner of the property at the time of the sale and that she had not exercised her right to repurchase within the specified period. The court found no evidence supporting the claim that the sale was an equitable mortgage, as none of the indicators of such a classification were present.

Regarding the registration of the Deed of Extra-Judicial Partition, the court ruled that it did not constitute a valid transfer of ownership since the corresponding deed of sale was never presented in evidence. The court emphasized that registration alone does not confer ownership without the proper documentation and compliance with legal requirements.

Significant Legal Principles Established:

1. A pacto de retro sale is valid if the vendor-a-retro is the rightful owner at the time of the sale and does not exercise the right to repurchase within the agreed period.
2. The classification of a transaction as an equitable mortgage requires the presence of specific indicators, none of which were found in this case.
3. Registration of a deed does not automatically confer ownership; proper documentation and compliance with legal requirements are essential for a valid transfer of property rights.