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412 SUPREME COURT REPORTS ANNOTATED

De Bayquen vs. Balaoro

*
No. L-28161. August 13, 1986.

EUFEMIA ELPA DE BAYQUEN and ESTEFANIA

BAYON VDA. DE ELPA, plaintiffs-appellants, vs.
EULALIO BALAORO, defendant-appellee.

Civil Law; Sales; Sale with right of repurchase; Contract not

an equitable mortgage, but deed of sale with right of repurchase,
absent any instances in the law which presumes that the contract
is one of equitable mortgage.—We agree with the trial court’s
finding that the contract is not an equitable mortgage but a deed
of sale with right to repurchase. Said court thus elucidated: “The
deed of conveyance states the purchase price as P2,000.00 for a
parcel of land, partly riceland and partly pastureland, with an
assessed value of P440.00. Based on the size, productivity and
accessibility, the price of P2,000.00 for said parcel is adequate.
The vendee admittedly took immediate possession after the
execution of the contract; no extension of the period of
redemption, at or after its expiration, was made. The vendee did
not retain any part of the purchase price. The sum of Two
Hundred Fifty Pesos (P250.00) claimed by vendors-plaintiffs to be

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* SECOND DIVISION.

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De Bayquen vs. Balaoro

delivered to them is not part of the purchase price retained by the

vendee, but merely the excess of the value of the yearly crops over
the purchase price resulting from the computation of the
plaintiffs. The vendee has declared the property under his name
and paid the corresponding real estate taxes, and there is no
circumstance by which the Court could fairly infer that the

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transaction was intended by the parties to secure the payment of

a debt or loan. There is no doubt as to the true nature of the
transaction and it was the Court finds, a contract of sale with
right to purchase.” Besides, not one of the instances enumerated
in Article 1602 of the Civil Code (re presumption that the contract
is one of equitable mortgage) exists in this case.
Same; Same; Same; Where the parties stipulate that a
contract is a deed of sale with right of repurchase ownership of the
property becomes consolidated by operation of law on the vendee
once there is failure to redeem within the stipulated period.—
Significantly, We long ago resolved this matter in the early case of
Rosario vs. Rosario, L-13018. Dec, 29, 1960 (110 Phil. 394) where
we thus enunciated: “Where the contract between the parties is
admitted and which has been stipulated by the parties to be a
deed of sale with right to repurchase, there should be no issue or
dispute about the effects thereof—that once there is failure to
redeem within the stipulated period, ownership thereof becomes
vested or consolidated by operation of law on the vendee. Any
other interpretation would be violative of the sanctity of the
contract between the parties.”

APPEAL from the decision of the Court of First Instance of

Abra.

The facts are stated in the opinion of the Court.

Agripino Brillantes for plaintiffs-appellants.
Demetrio V. Pre for defendant-appellee.

PARAS, J .:

This is an appeal from the decision of the then Court of

First Instance of Abra in Civil Case No. 444 dismissing the
complaint of plaintiffs-appellants against defendant-
appellee.
The records show that on January 16, 1954, appellants
sold the land under question to the appellee, reserving
their right to repurchase the said land within four (4)
years. The plaintiffs-
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414 SUPREME COURT REPORTS ANNOTATED

De Bayquen vs. Balaoro

appellants failed to repurchase the land within the four

year period. They now assert their right to repurchase the
subject property after more than thirteen (13) years, (p. 40,
Record.)
At the trial court, the parties agreed on the following
stipulation of facts:

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“At this pre-trial parties are all present assisted by their

respective counsel and after a short conference, as the plaintiffs
cannot agree on the settlement proposed by the defendant, they
now come to stipulate:

“1. That the land described in paragraph 2 of the complaint

was the subject of a Deed of Sale with right to repurchase
dated January 16, 1954, duplicate copy of which is marked
as Exh. A, and that the same property described in the
Tax Declaration No. 1150 in the name of Eulalio Balaoro
also marked as Exh. B;
“2. That plaintiffs failed to repurchase the property within
the stipulated period in the contract Exh. A up to this day;
“3. That the defendant failed to file in court consolidation
proceedings of the property in accordance with the
provisions of the Civil Code;
“4. That parties renounce their respective claims for damages
and submit to the court the question of law whether the
plaintiffs still have the right to redeem the said property
described in Exh. A; and
“5. That parties submit the case for decision on the basis of
these stipulations upon the filing of their respective
memoranda within 10 days from today.” (p. 2, Rec.)

On the basis of the aforequoted stipulation of facts and

other pleadings submitted by both parties, the trial court
ruled that the vendors-appellants have lost their right to
repurchase the land under controversy and that by
operation of law, ownership of such land had become
consolidated in the vendee-appellee.
The plaintiffs-appellants appealed the decision of the
trial court, alleging several errors, which defendant-
appellee disputed together with the corresponding
evaluation thereof.
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De Bayquen vs. Balaoro

Appellants contend that the trial court erred in holding

that there is no dispute between the parties regarding the
nature of the purported “deed of sale with right to
repurchase” and that actually the transaction is a
mortgage. Defendant-appellee refutes this by putting up
the claim that the fact that the contract is in truth a deed
of sale with right to repurchase has been admitted by
appellants and the same has been stipulated upon by the
parties.
We agree with the trial court’s finding that the contract
is not an equitable mortgage but a deed of sale with right
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to repurchase. Said court thus elucidated:

“The deed of conveyance states the purchase price as P2,000.00

for a parcel of land, partly riceland and partly pastureland, with
an assessed value of P440.00. Based on the size, productivity and
accessibility, the price of P2,000.00 for said parcel is adequate.
“The vendee admittedly took immediate possession after the
execution of the contract; no extension of the period of
redemption, at or after its expiration, was made. The vendee did
not retain any part of the purchase price. The sum of Two
Hundred Fifty Pesos (P250.00) claimed by vendors-plaintiffs to be
delivered to them is not part of the purchase price retained by the
vendee, but merely the excess of the value of the yearly crops over
the purchase price resulting from the computation of the
plaintiffs. The vendee has declared the property under his name
and paid the corresponding real estate taxes, and there is no
circumstance by which the Court could fairly infer that the
transaction was intended by the parties to secure the payment of
a debt or loan. There is no doubt as to the true nature of the
transaction and it was, the Court finds, a contract of sale with
right to purchase.”

Besides, not one of the instances enumerated in Article

1602 of the Civil Code (re presumption that the contract is
one of equitable mortgage) exists in this case.
Appellants also insist that the trial court erred in
holding that the ownership over the property in question
consolidated by operation of law in the defendant-appellee
immediately after plaintiffs-appellants failed to repurchase
the property within four years.
Significantly, We long ago resolved this matter in the
early case of Rosario vs. Rosario, L-13018, Dec. 29, 1960
(110 Phil.

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De Bayquen vs. Balaoro

394) where we thus enunciated:

“Where the contract between the parties is admitted and which,

has been stipulated by the parties to be a deed of sale with right
to repurchase, there should be no issue or dispute about the
effects thereof—that once there is failure to redeem within the
stipulated period, ownership thereof becomes vested or
consolidated by operation of law on the vendee. Any other
interpretation would be violative of the sanctity of the contract
between the parties.”

Besides, the needed judicial hearing contemplated by Art.

1807 of the Civil Code refers not to the consolidation itself,

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but to the registration of the consolidation. (See Rosario vs.

Rosario, L-13018, Dec. 29, 1960; see also Dakandan vs.
Julio, L-19101, Feb, 29, 1964.)
We find no necessity to discuss the other assigned errors
because they are mere corollaries of the rest.
WHEREFORE, the decision of the court a quo is hereby
AFFIRMED, with costs against appellants.
SO ORDERED.

Feria (Chairman), Fernan, Alampay and Gutierrez,

Jr., JJ., concur.

Decision affirmed.

Notes.—Before the expiration of the 1-year period

within which the judgment debtor or mortgagor may
redeem the property, the purchaser thereof is not entitled,
as a matter of right, to possession of the same. (Reyes vs.
Honada, 14 SCRA 215.)
Where a mortgage on registered land is foreclosed extra-
judicially and the property sold at public auction, the one-
year period of redemption starts not from the date of the
sale but from the date when the certificate of sale issued by
the sheriff was registered in the office of the register of
deeds. (Salazar vs. Meneses, 8 SCRA 495.)

——o0o——

417

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