10/20/21, 1:29 PM [ G.R. No.

179205, July 30, 2014 ]

740 PHIL. 55

SECOND DIVISION
[ G.R. No. 179205, July 30, 2014 ]
HEIRS OR REYNALDO DELA ROSA, NAMELY: TEOFISTA DELA ROSA,
JOSEPHINE SANTIAGO AND JOSEPH DELA ROSA, PETITIONERS, VS.
MARIO A. BATONGBACAL, IRENEO BATONGBACAL, JOCELYN
BATONGBACAL, NESTOR BATONGBACAL AND LOURDES BATONGBACAL,
RESPONDENTS.

DECISION

PEREZ, J.:

This is a Petition for Review on Certiorari[1] pursuant to Rule 45 of the Revised Rules of Court, assailing
the 7 December 2006 Decision[2] and 8 August 2007 Resolution[3] of the Fourth Division of the Court of
Appeals in CA-G.R. CV No. 64172. In its assailed Resolution, the appellate couti modified its earlier ruling
and proceeded to direct petitioners to execute the requisite Deed of Sale over the subject property.

The Facts

The subject prope1iy consists of a 3,750 square meter-portion of the 15,001 square meters parcel of land
situated in Barrio Saog, Marilao, Bulacan denominated as Lot No. 1, and registered under Transfer
Certificate of Title (TCT) No. T-1 07449[4] under the names of Reynaldo Del a Rosa (Reynaldo), Eduardo
Dela Rosa (Eduardo), Araceli Del a Rosa (Araceli) and Zenaida Dela Rosa (Zenaida).

Sometime in 1984, Reynaldo offered to sell the subject property to Guillermo Batongbacal (Guillermo) and
Mario Batongbacal (Mario) for F50.00 per square meter or for a total of Fl87,500.00. Pursuant to the
agreement, Reynaldo received an advance payment of F31 ,500.00 leaving a balance of F156,000.00. As
shown in the document denominated as Resibo and signed by Reynaldo on 18 February 1987, the parties
agreed that the amount ofF20,000.00 as part of the advance payment shall be paid upon the delivery of the
Special Power-of-Attorney (SPA), which would authorize Reynaldo to alienate the subject property on
behalf of his co-owners and siblings namely, Eduardo, Araceli and Zenaida. The balance thereon shall be
paid in F10,000.00 monthly installments until the purchase price is fully settled, to wit:

RESIBO

Tinaggap ko ngayong araw na ito kay Engr. Guillermo A. Batongbacal, ng Poblacion II,
Marilao, Bulacan, ang halagang sampung libong piso (P10,000.00) salaping Pilipino, hilang
bahaging hayad sa bahagi ng lupang may sukat na 3,750 sq.m. na aking kabahagi sa isang (1)
lagay na lupang nasasaog, Marilao, Bulakan, sinasaklaw ng T.C.T. No. T-1 07449, ng Bulakan,
na ipinagkasundo kong ipagbili sa naulit na Engr. Guillermo A. Batongbacal sa halagang
Limampung Piso (P50.00) salaping Filipino, bawat isang (1) metrong parisukat. Ang paunang
hayad na aking tinanggap ukol sa lupang nabanggit sa itaas ay P21 ,500.00, nuong Abril 14-18,
1984. Ang halagang dapat pa niyang bayaran sa akin ay P 156,000.00, na ang halagang
dalawampung libong piso (P20,000.00) ay bahayaran niya sa akin sa araw na nag power-of‐­
attorney nina Zenaida dela Rosa, at Enrique Magsaloc ay aking nahigay sa nasahing Engr.

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Guillermo A. Batongbacal; na ang nalalahing hahaging bayad ay kanyang habayaran sa akin

ng Sampung libong piso (P10,000.00) salaping Pilipino, bawat buwan hanggang sa matapusan
ang pagbabayad ng kabuuang halaga na Isang Daang at Walumpu't Pitong libo Limang Daang
Piso (P187,500.00). Ang bahaging aking ipinagbibili ay ang Lote No. 1, may sukat na 3,750
sq.m. na makikita sa nakalakip na sketch plan na aking ding nilagdaan sa ikaliliwanag ng
kasulutang ito.[5]

Subsequent to the execution of the said agreement, Mario and Guillermo, on their own instance, initiated a
survey to segregate the area of 3,750 square meters from the whole area covered by TCT No. T-107449,
delineating the boundaries of the subdivided parts. As a result, they came up with a subdivision plan
specifically designating the subject property signed by a Geodetic Engineer.[6] Mario and Guillermo
thereafter made several demands from Reynaldo to deliver the SPA as agreed upon, but such demands all
went unheeded.

Consequently, Guillermo and Mario initiated an action for Specific Performance or Rescission and
Damages before the Regional Trial Court (RTC) of Malolos, Bulacan, seeking to enforce their Contract to
Sell dated 18 February 1987. In their Complaint docketed as Civil Case No. 215-M-90,[7] Mario and
Guillermo asserted that they have a better right over the subject property and alleged that the subsequent
sale thereof effected by Reynaldo to third persons is void as it was done in bad faith. It was prayed in the
Complaint that Reynaldo be directed to deliver the SPA and, in case of its impossibility, to return the
amount of P31,500.00 with legal interest and with damages in either case.

To protect their rights on the subject property, Mario and Guillermo, after initiating Civil Case No. 215-M-
90, filed a Notice of Lis Pendens registering their claim on the certificate of title covering the entire
property.

In refuting the allegations of Mario and Guillermo in their Complaint. Reynaldo in his Answer[8] countered
that the purported Contract to Sell is void, because he never gave his consent thereto. Reynaldo insisted that
he was made to understand that the contract between him and the Batongbacals was merely an equitable
mortgage whereby it was agreed that the latter will loan to him the amount of P31,500.00 payable once he
receives his share in the proceeds of the sale of the land registered under TCT No. T-1 07449.

Following the pre-trial conference without the parties reaching an amicable settlement, trial on the merits
ensued.[9] Both parties proceeded to present, in open court, documentary and testimonial evidence to
substantiate their claims.

For failure of Mario and Guillermo as plaintiffs therein to adduce sufficient evidence to support their
complaint, the RTC, in a Decision[10] dated 24 March 1999, dismissed Civil Case No. 215-M-90 and
ordered Reynaldo to return to the former the sum of P28,000.00 with 12% annual interest. Reynaldo failed
to convince the court a quo that the contract he entered into with Mario was an equitable mortgage. It was
held by the trial court, however, that the supposed Contract to Sell denominated as Resibo is unenforceable
under Article 1403 of the New Civil Code because Reynaldo cannot bind his co-owners into such contract
without an SPA authorizing him to do so. As such, Reynaldo cannot be compelled to deliver the subject
property but he was nonetheless ordered by the court to return the amount he received as part of the contract
price since no one should be allowed to unjustly enrich himself at the expense of another. The RTC
disposed in this wise:

WHEREFORE, premises considered[,] the instant complaint is hereby DISMISSED.

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However, [Reynaldo is] hereby ordered to return to [Mario and Guillermo of the sum of
28,000.00 plus 12% interest per annum from the date of this decision until fully paid.[11]

On appeal, the Court of Appeals, in its Decision[12] dated 7 December 2006, brushed aside the claim of
equitable mortgage and held that the sale effected by Reynaldo of his undivided share in the property is
valid and enforceable. According to the appellate court, no SPA is necessary for Reynaldo's disposition of
his undivided share as it is limited to the portion that may be allotted to him upon the termination of the co-
ownership. The Batongbacals could have validly demanded from Reynaldo to deliver the subject property
pursuant to the Contract to Sell but such option is no longer feasible because the entire property has already
been sold to third persons to whom a new title was issued. The appellate court thus proceeded to rescind the
contract and ordered Reynaldo to return the amount he received as consideration thereby restoring the
parties to their situation before entering into the agreement. The decretal portion of the decision reads:

In the course of the trial, Guillermo died and he was substituted by his heirs as party to the case.

WHEREFORE, the decision dated March 24, 1999 is AFFIRMED with modification that
appellee is ordered to return to appellants the amount of P31,500.00 plus 12% interest per
annum from the date of decision of the trial court until full payment thereof.

In addition, the appellee is ordered:

1. To pay appellants P50,000.00 as compensatory damages; P50,000.00 as moral damages;

and P30,000.00 as exemplary damages.

2. To pay attorney's fees and litigation expenses of P50,000.00; and

[13]

3. Double costs.

In seeking modification of the appellate court's decision, Mario and Guillermo pointed out that the title of
the subject property has not yet been transferred to third persons, and thus, Reynaldo can still be compelled
to execute a deed of conveyance over his undivided share of the entire property.

In a Resolution[14] dated 8 August 2007, the Court of Appeals granted the Motion for Reconsideration of
Mario and Guillermo and directed Reynaldo to convey the subject property to them, viz:

WHEREFORE, [Reynaldo's] Motion for Reconsideration is DENIED for lack of merit.

Upon the other hand, [Mario and Guillermo] Motion for Reconsideration is GRANTED.
Accordingly, the decision dated December 7, 2006 is PARTIALLY RECONSIDERED ordering
defendant-appellee Reynaldo dela Rosa or his successor-in-interest to execute the requisite Deed
of Sale over his 1/4 undivided share in the subject property covered by TCT T-107449 and to
accept the consideration of P156,000.00 within thirty (30) days from the finality of the decision.

In case of failure of [Reynaldo] to execute the deed of sale, the Branch Clerk of Court of RTC
Br. 16 of Malolos, Bulacan is directed to execute the same and receive the Pl56,000.00 balance
on the purchase price on behalf of Reynaldo dela Rosa.[15]

On 9 September 2007, the appellate court was notified of the death of Reynaldo, and his heirs sought to be
substituted as party in this case.[16]

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Petitioners Heirs of Reynaldo are now before this Court via this instant Petition for Review on Certiorari
praying that the Court of Appeals Decision and Resolution be reversed on the ground that it was rendered
not in accordance with the applicable law and jurisprudence.

Issues

I.

WHETHER OR NOT THERE IS A CONTRACT OF SALE BETWEEN REYNALDO DELA

ROSA AND GUILLERMO BATONGBACAL;

II.

ASSUMING THAT THERE IS A CONTRACT OF SALE, WHETHER OR NOT

GUILLERMO BATONGBACAL COMPLIED WITH HIS OBLIGATION [UNDER THE
CONTRACT];

III.

WHETHER OR NOT RESPONDENTS ARE GUILTY OF LACHES;

IV.

WHETHER OR NOT MARIO BATONGBACAL IS A PARTY TO THE TRANSACTION

BETWEEN REYNALDO DELA ROSA AND GUILLERMO BATONGBACAL;

V.

WHETHER OR NOT RESPONDENT[S] ARE ENTITLED TO AN AWARD OF DAMAGES;

VI.

ASSUMING ARGUENDO THAT RESPONDENTS ARE ENTITLED TO AWARD OF

DAMAGES. WHETHER OR NOT TI IE COURT OF APPEALS. A WARD OF DAMAGES
WAS EXCESSIVE. [17]

The various contentions revolve on the sole issue of whether the contract entered into by parties was a
Contract to Sell or an equitable mortgage. The Court will not delve into questions which arc factual m
nature, consistent with the rule that this Court is not a trier of facts.

The Court's Ruling

In assailing the Court of Appeals' Decision and Resolution, petitioners are unflinching in their stand that the
disputed contract purporting to be an absolute deed of sale was an equitable mortgage with the subject
property as security for a loan obligation. To prove their point, petitioners asserted that the consideration in
the amount of P187,500.00 for a property consisting of 15,001 square meters is grossly inadequate because
the land valuation in Barrio Saog, Marilao, Bulacan, at the time the transaction was entered into by the
parties in 1984, was already P80.00 to P110.00 per square meter. The gross inadequacy of the price, the
Heirs of Reynaldo argued, is telling of the intention of the parties to mortgage and not to sell the property
with the end view of affording the mortgagor an easy opportunity to redeem the property should his means
permit him to do so.

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An equitable mortgage is defined as one although lacking in some formality, or form or words, or other
requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real property as
security for a debt, and contains nothing impossible or contrary to law. For the presumption of an equitable
mortgage to arise, two requisites must concur: (1) that the parties entered into a contract denominated as a
sale; and (2) the intention was to secure an existing debt by way of mortgage. Consequently, the non-
payment of the debt when due gives the mortgagee the right to foreclose the mortgage, sell the property and
apply the proceeds of the sale for the satisfaction of the loan obligation.[18] While there is no single test to
determine whether the deed of absolute sale on its face is really a simple loan accommodation secured by a
mortgage, the Civil Code, however, enumerates several instances when a contract is presumed to be an
equitable mortgage, to wit:

Article 1602. The contract shall be presumed to be an equitable mortgage, in any of the
following cases:

(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument extending
the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price; (5) When the vendor
binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the parties is that
the transaction shall secure the payment of a debt or the performance of any other
obligation.

In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as
rent or otherwise shall be considered as interest which shall be subject to the usury laws.

A perusal of the contract denominated as Resibo reveals the utter frailty of petitioners' position because
nothing therein suggests, even remotely, that the subject property was given to secure a monetary
obligation. The terms of the contract set forth in no uncertain terms that the instrument was executed with
the intention of transferring the ownership or the subject property to the buyer in exchange for the price.
Nowhere in the deed is it indicated that the transfer was merely intended to secure a debt obligation. On the
contrary, the document clearly indicates the intent of Reynaldo to sell his share in the property. The primary
consideration in determining the true nature of a contract is the intention of the parties.[19] If the words of a
contract appear to contravene the evident intention of the parties, the latter shall prevail.[20] Such intention
is determined not only from the express terms of their agreement, but also from the contemporaneous and
subsequent acts of the parties.[21] That the parties intended some other acts or contracts apart from the
express terms of the agreement, was not proven by Reynaldo during the trial or by his heirs herein.[22]
Beyond their bare and uncorroborated asseverations that the contract failed to express the true intention of
the parties, the record is bereft of any evidence indicative that there was an equitable mortgage.

Neither could the allegation of gross inadequacy of the price carry the day for the petitioners. It must be
underscored at this point that the subject of the Contract to Sell was limited only to 1/4 pro-indiviso share of
Reynaldo consisting an area of 3,750 square meter and not the entire 15,001-square meter parcel of land. As
a co-owner of the subject property, Reynaldo's right to sell, assign or mortgage his ideal share in the
property held in common is sanctioned by law. The applicable law is Article 493 of the New Civil Code,
which spells out the rights of co-owners over a co-owned property, to wit:

Art. 493. Each co-owner shall have the full ownership of his part and or the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute
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another person in its enjoyment, except when personal rights arc involved. But the effect of the
alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which
may be allotted to him m the division upon the termination of the co-ownership.

Pursuant to this law, a co-owner has the right to alienate his pro­indiviso share in the co-owned property
even without the consent of his co-­owners.[23] This right is absolute and in accordance with the well-settled
doctrine that a co-owner has a full ownership of his pro-indiviso share and has the right to alienate, assign
or mortgage it, and substitute another person for its enjoyment.[24]  In other words, the law does not
prohibit a co-owner from selling, alienating, mortgaging his ideal share in the property held m common.[25]

In Vaglidad v. Vaglidad, Jr., a case nearly on all fours to the present petition, the Court upheld the right of
the co-owner to alienate his pro­indiviso share in the co-owned property as part of his right of dominion. It
was even pointed out that since the previous sale is valid, the subsequent conveyance effected by the co-
owner is null and void pursuant to the principle that "no one can give what he does not have," nemo dat
quod non habet, thus:

LORETO sold the subject property to GABINO, JR. on May 12, 1986 as a co-owner. LORETO
had a right, even before the partition of the property on January 19, 1987, to transfer in whole or
in part his undivided interest in the lot even without the consent of his co-heirs. This right is
absolute in accordance with the well-settled doctrine that a co-owner has full ownership of his
pro-indiviso share and has the right to alienate, assign or mortgage it, and substitute another
person for its enjoyment. Thus, what GABINO, JR. obtained by virtue of the sale on May 12,
1986 were the same rights as the vendor LORETO had as co-owner, in an ideal share equivalent
to the consideration given under their transaction.

LORETO sold some 1,604 square meters of Lot No. 1253 to GABINO, JR. Consequently, when
LORETO purportedly sold to WILFREDO on December 7, 1989 the same portion of the lot, he
was no longer the owner of Lot No. 1253-B. Based on the principle that "no one can give what
he does not have," LORETO could not have validly sold to WILFREDO on December 7, 1989
what he no longer had. As correctly pointed out by the appellate court, the sale made by
LORETO in favor of WILFREDO is void as LORETO did not have the right to transfer
the ownership of the subject property at the time of sale.[26] (Emphasis supplied).

In the same breadth, a co-owner cannot be compelled by the court to give their consent to the sale of his
share in a co-owned property. In Arambula v. Nolasco, the Court intimated:

The ultimate authorities in civil law, recognized as such by the Court, agree that co-owners such
as respondents have over their part, the right of full and absolute ownership. Such right is the
same as that or individual owners which is not diminished by the fact that the entire property is
co-owned with others. That part which ideally belongs to them, or their mental portion, may be
disposed of as they please, independent of the decision of their co-owners. So we rule in this
case. The respondents cannot be ordered to sell their portion of the co-owned properties. In the
language of Rodriguez v. Court of First Instance of Rizal, "each party is the sole judge of what is
good for him."[27] (Underscoring ours).

Thus, even if the impression of the Court of Appeals were true, i.e., that the entire propc1iy has been sold to
thirds persons, such sale could not have affected the right of Mario and Guillermo to recover the property
from Reynaldo. In view of the nature of co-ownership, the Court of Appeals correctly ruled that the terms
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in the Contract to Sell, which limited the subject to Reynaldo's ideal share in the property held in common
is perfectly valid and binding. In fact, no authority from the other co-owners is necessary for such
disposition to be valid as he is afforded by the law full­ownership of his part and of the fruits and benefits
pertaining thereto. A condition set forth in a sale contract requiring a co-owner to secure an authority from
his co-owners for the alienation of his share, as seemingly indicated in this case, should be considered mere
surplusage and docs not, in any way, affect the validity or the enforceability of the contract. Nor should
such a condition indicate an intention to sell the whole because the contrary intention has been clearly
written:

x x x Ang bahaging aking ipinagbibili ay ang !.ole No. 1, may sukat na 3,750 sq.m. na makikita
sa nakalakip na sketch plan na aking ding nilagdaan sa ikaliliwanag ng kasulatang ito.[28]

Indeed, the intention clearly written, settles the issue regarding the purchase price. A contract of sale is a
consensual contract, which becomes valid and binding upon the meeting of minds of the parties on the price
and the object of the sale.[29] The mere inadequacy of the price docs not affect its validity when both parties
arc in a position to form an independent judgment concerning the transaction, unless fraud, mistake or
undue influence indicative of a defect in consent is present.[30] A contract may consequently be annulled on
the ground of vitiated consent and not due to the inadequacy of the price.[31] In the case at bar, however, no
evidence to prove fraud, mistake or undue influence indicative of vitiated consent is attendant.

As the parties invoking equitable mortgage, the Heirs of Reynaldo did not even come close to proving that
the parties intended to charge the property as security for a debt, leaving us with no other choice but to
uphold the stipulations in the contract. Basic is the rule that if the terms of the contract are clear and leave
no doubt upon the intention of the parties, the literal meaning of its stipulations shall control,[32] we find
that the Court of Appeals cannot be faulted for ruling, in modification of its original judgment, that the sale
effected by Reynaldo of his undivided share in the property is valid and enforceable.

WHEREFORE, premises considered, the petition is DENIED. The assailed Decision and Resolution of
the Court of Appeals are hereby AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Brion, Del Castil, Perez, and Perlas-Bernabe, JJ., concur.

[1] Rollo, pp. 9-34.

[2]
Penned by Associate Justice Lucenito N. Tagle with Associate Justices Robct1o A. Barrios and Mario L
Guariña II I, concurring. Rollo, pp. 36-46.

[3]
Penned by Associate Justice Lucenito N. Tagle with by Associate Justices Roberto A. Barrios and
Romeo F. Barza. concurring. I d. at 48-50.

[4] Folder of Exhibits, pp. 52-53.

[5] Id. at 5.

[6] Id. at 40-41.

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[7] Records, pp. 1-4.

[8] Id. at 10-12.

[10] Rollo, pp. 51-87.

[11] Id. at 87.

[12] Id. at 36-46.

[13] Id. at 44-45.

[14] Id. at 48-50.

[15] Id. at 49-50.

[16] CA rollo, pp. 159.-161.

[17] Rollo, pp. 18-19.

[18] Spouses Alvaro v. Spouses Ternida, 515 Phil. 267, 271-272 (2006).

[19] Heirs
of Policronio M. Ureta. Sr. v. Heirs of Liberato M. Ureta, G.R. No. 165748, 14 September 2011,
657 SCRA 555, 576.

[20] Id.

[21] Id.

[22] Id.

[23] Mercado v. Court of Appeals, G.R. No. 108592, 26 January 1995, 240 SCRA 616, 620-621.

[24] Vaglidad v. Vaglidad, Jr., 537 Phil. 310, 327 (2006).

[25] Acebedo v. Abesamis, G.R. No. 102380, 18 January 1993,217 SCRA 186, 194-195.

[26] Supra note 24 at 327.

[27] G.R. No. 189420,26 March 2014.

[28] Folder of Exhibits, pp. 52-53.

[29] Bravo-Guerrero v. Bravo, 503 Phil. 220, 235 (2005).

[30] Bautista v. Court of Appeals, 479 Phil. 787, 795 (2004).

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[31] Id.

[32] New Civil Code, Art. 1370.

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