ASUNCION JUANIR VDA. DE ALVAREZ, PETITIONER, VS. COURT OF APPEALS, AND JOSEFA ALMEDA (DECEASED) NOW HER HEIRS, NAMELY: FREDISVINDA A. CONSUNJI, ANGELITA A. CRUZ, EMMANUEL M. ALM…

The main issue for resolution is whether Lot 129 at Penefrancia
Avenue, Naga City, with an area of 510 square meters, was actually sold by
Asuncion Juanir Vda. de Alvarez to Josefa Almeda or merely mortgaged to secure
a loan.

In a complaint for “Recovery of Possession” filed on January 30,
1981, with the Court of First Instance of Camarines Sur, plaintiff Josefa
Almeda alleged that, as the registered owner of the said Lot 129, she leased a
170 square-meter portion thereof, including the building erected on it, to
defendant Asuncion Juanir Vda. de Alvarez for a monthly rental of P900.00; that
the defendant failed to pay the rentals
from August to December 1978, from October to December 1979, and from January
1980 onward, and did not keep her promise to leave the rented property after
Christmas of 1979; and that despite written demands, she had refused to vacate
the premises.^[1]

In her answer, defendant Alvarez averred that sometime in 1973,
the plaintiff offered to lend her money to settle her unpaid loan of P20,000.00
with the Continental Bank, Naga City, provided that the land given as security
for the said loan would be mortgaged to the plaintiff instead. For this purpose, the plaintiff asked her to
sign a document, which she did not read nor was it read to her, that she
assumed was a mortgage pursuant to their agreement. It was only later that she discovered it was a deed of sale of
her land together with the improvements thereon for the sum of P80,000.00.^[2]

While the case was pending in the trial court, plaintiff Josefa
Almeda died and was substituted by her heirs, the private respondents herein.

On April 20, 1990, the lower court rendered judgment: 1) declaring that the contract entered into
by the parties was one of absolute sale; 2) confirming the validity of the
contract; 3) ordering defendant Alvarez and her successors-in­-interest to
surrender the possession of the subject lot to plaintiff Almeda’s heirs or
successors-in-interest; 4) ordering the defendant to pay the monthly rental of
P900.00 for the entire duration of her occupancy of the land and building until
the same was vacated, P2,500.00 as attorney’s fees, and P500.00 as expenses of
litigation; and 5) granting the writ of injunction preventing the defendant or
her heirs or successors-in-interests from committing further acts of
dispossession.^[3]

On appeal, the decision was affirmed by the respondent court,^[4]
which also subsequently denied the appellant’s motion for new trial and/or
reconsideration. Alvarez then came to
this Court, insisting that the contract invoked by Almeda should be treated as
an equitable mortgage on the grounds that: 1) the document purporting on
its face to be an absolute sale was in fact a mortgage given as a security for
the repayment of a loan; 2) being merely a second grader, she could not have
intelligently understood the document she signed; 3) the price is grossly
inadequate; and 4) she continued to possess the property in the concept of an
owner.

The petitioner bases her arguments on the presumptions laid down
by Article 1602 of the Civil Code, in relation to Article 1604 of the same
Code, said provisions reading as follows:

Art. 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.

Art. 1604. The provision of
Article 1602 shall also apply to a contract purporting to be an absolute sale.

The document evidencing the transaction between Josefa Almeda and
the petitioner is denominated a contract of sale.^[5]
However, parol evidence may be introduced to show that the agreement was in
fact merely a mortgage masquerading as a sale.

Section 9, Rule 130, of the Rules of Court provides:

When the terms of an agreement have been reduced to writing, it is considered as containing all the
terms agreed upon and there can be, between the parties and their
successors-in-interest, no evidence of such terms other than the contents of
the written agreement.

However, a party may present evidence to modify, explain or add to
the terms of the written, agreement if he puts in issue in his pleading:

a)    an intrinsic ambiguity, mistake or
imperfection in the written agreement;

b)    the failure of the written agreement to
express the true intent and agreement of the parties thereto;

x x x

There is no ambiguity, mistake or imperfection in the deed of
sale. We also find no compelling reason
to consider the express stipulations in the deed of sale were intended only to
create an equitable mortgage. The
petitioner has not presented clear, satisfactory and convincing evidence that
the real intention of the parties to the said deed was to make the property in
question merely a security for a loan extended by Almeda to the petitioner.

Article 1371 of the Civil Code provides that in order to judge
the intention of the contracting parties, their contemporaneous and subsequent
acts shall be principally considered. In the case before us, the facts clearly show that the transaction
between Almeda and the petitioner was indeed a contract of sale.

It is noted that in May 1973, Almeda caused the registration of
the disputed deed of sale, resulting in the cancellation of Original
Certificate of Title No. 289^[6] in
the name of the petitioner and the consequent issuance of Transfer Certificate
of Title No. 6999^[7]
in Almeda’s favor. The petitioner admitted having learned this fact
as early as 1973, first from her lawyer and personally afterwards, when she
went to the Register of Deeds to verify the matter.

If Alvarez was really
misled into signing the deed of sale, she should have protested or at
least notified the Register of Deeds that she had only mortgaged and not sold
the land to Almeda. Better still, she
should have taken steps to annul the sale and recover the property. Inexplicably, she did nothing at all. It was only in 1981, when Almeda sued her
for recovery of the property, that she alleged in her answer that the deed of
sale was a disguised mortgage. It took
her all of eight years to challenge the registration of the disputed property
in favor of Almeda.

The Court also notes that, also in 1973, Almeda declared the
subject property in her name for tax purposes, resulting in the cancellation of
the tax declaration in the petitioner’s name.^[8] Alvarez
never questioned the said cancellation nor did she ask for the tax declaration
in her name to be revived.

It is a matter of record that when the petitioner and Almeda were
sued in 1979 by Dolores Salvan, one of the lessees of the subject property, she
declared in her answer^[9] to
the complaint:

4. That defendant
admits that she has been receiving plaintiff’s rentals but from 1973 she has
been receiving such rentals for defendant Josefa Almeda after the latter
purchased the land from her and that when she refused to receive
plaintiff’s rental for March, it was upon instruction of defendant Josefa
Almeda, the owner of the land;

5. That she denies
the allegations contained in paragraph 6 of the complaint, the truth being that
if she refused to accept payment, it was because of the instructions made upon
her by her co-defendant, owner of the land, Josefa Almeda;

9. That plaintiff
knows that she has no cause of action against the herein defendant, she
being no longer the owner of the land or the leased premises, x x x
(Emphasis supplied).

And when in May 1979, another lessee, Basilio Caning, filed a
complaint against her, the petitioner made the following allegations in her
answer:^[10]

4. That she denies
the allegations contained in par. 4 of the complaint, the truth being that
plaintiff has never tendered any payment in February or March, what happened
was that defendant, upon instruction of Mrs. Josefa Almeda, who is the
present owner of both the land and the building occupied and leased by
plaintiff, Mrs. Almeda having long bought this from defendant, she gave
notice to plaintiff to vacate the premises as the land will be used for the
construction of a multi-story building to keep up with the growing commercial
needs of the City;

5. That she
specifically denies each and every allegation contained in pars. 5, 6, 7, and 9
of the complaint, she having no knowledge of any useful improvement made by
plaintiff, nor has she given any consent therefor, and she knows not of any
portion of the building which needed repairs and besides as already stated defendant
sold the lot including the building to Mrs. Josefa Almeda since 1973 and
therefore she had no more obligation to repair the same, but the owner if at
all which is Mrs. Almeda;

x x x x x

7. That the
complaint does not include the real parties in interest, Mrs. Josefa Almeda,
who is the registered owner and lessor of the lot and building in question
and without her included no final determination of this case can be had;

x x x x x

WHEREFORE, premises considered, it is most respectfully prayed of
this Honorable Court that this case be dismissed, or if at all that it be
prosecuted against the proper party, Mrs. Josefa Almeda, x x x”. (Emphasis supplied).

The petitioner points out that it was Almeda who paid for the
services of the lawyer who prepared the said pleadings, but that fact alone
does not disprove or nullify her declarations therein.

An admission in a pleading in one action may be admitted in
evidence against the pleader or his successor-in-interest at the subsequent
trial of the same suit or in another action involving the same issue or in
which the admission is pertinent to the issues.^[11] It
is true that this rule will not apply if the pleading in which the statement is
found was not signed by the party and no proof was presented that he had
authorized the making of such admission.^[12] In
the case at bar, however, the aforequoted answers bear the signature of the
petitioner, who in fact acknowledged it at the trial.^[13]

Alvarez now claims that she signed the pleadings merely upon the
prodding of Almeda, who had not read or explained their contents to her. The petitioner’s behavior is certainly
strange, considering that this happened six years after she and her lawyer came
to know about the transfer of the land in Almeda’s name. Almeda and Alvarez would have been at
loggerheads by that time. Yet, Alvarez would have this Court believe
that she still willingly left their common defense to Almeda and willingly
signed the pleadings without clearing them first with her own lawyer. It is inconceivable that Alvarez would still
have trusted Almeda if it is true that she had earlier been deceived by this
person.

The petitioner says Almeda took advantage of her illiteracy but
her own evidence reveals her shrewdness and shows that she is not all that
gullible or helpless, as she pretends. She herself negated this pose when she testified that she was able to
mortgage the subject lot no less than three times with different banks without
any difficulty or the assistance of a lawyer. She said she knew she could manage by herself.^[14]

Alvarez also claims that she could not have sold the disputed
property for only P80,000.00 because she even turned down an offer in 1971 to
buy the land at P265,200.00. She
presents no corroboration, however, such as the testimony of the supposed
offeror.

To show that the consideration of P80,000.00 was grossly
inadequate, the petitioner invites attention to Tax Declaration No. 16807^[15]
and a deed of sale covering a nearby 906 square meter lot, which was sold for
P600,000.00.^[16]

The deed was executed on June 22, 1987. Surely, it cannot be considered evidence of the market value of
the land in 1973, all of fourteen years earlier. As for the tax declaration, which was issued on May 14, 1974, the
true market value of the land in question is placed at only P60,000.00 and that
of the building at only P7,200.00, for a total of P67,200.00. This instrument belies the petitioner’s
contention that the price of P80,000.00 is grossly inadequate.

The petitioner points to certain documents she filed with the
respondent court tending to show, from a comparison of the 1987 market value of
a lot adjacent to the disputed property and the 1973 market value of the
disputed property itself, that the consideration for her land was grossly
inadequate. The Court of Appeals did
not err in rejecting these documents on the ground that they had not been
formally offered as evidence with the trial court. Section 34, Rule 132, of the Rules of Court provides that the
court shall not consider evidence not formally offered. Furthermore, the documents could hardly be
considered newly-discovered evidence to justify the grant of a new trial as
they were existing and known to the petitioner at the time of the original
trial.

Even on the assumption that the price of P80,000.00 was below the
market value of the lot in 1973, it would nonetheless not be gross and
unconscionable, as the petitioner insists. According to Tolentino, the presumption of equitable mortgage will apply
only if it is clearly shown that the consideration was unusually inadequate
such that the mind revolts at it and such that a reasonable man would neither
directly or indirectly be likely to consent to it.^[17]

In Cuyugan v. Santos,^[18] the
Court held that another test to determine whether a conveyance is a sale or
merely a security for the payment of a loan is the continued existence of a
debt or liability on the part of the alleged mortgagor. If such a relationship exists, the
transaction is a mortgage; otherwise, it is a contract of sale.

In the present case, the petitioner admitted that she had never
paid the alleged indebtedness^[19] and
there is no evidence either that she attempted or offered to discharge the alleged
mortgage. On the contrary, it was
Almeda, the alleged lender, who had made payments to the
petitioner as follows: P40,000.00 on
May 23, 1973;^[20]
P60,000.00 on February 11, 1974;^[21]
P2,000.00 on February 7, 1975;^[22] and
P18,000.00 on April 22, 1976^[23]. All the receipts acknowledging the said payments were signed by the petitioner, who did
not controvert them at the trial.

It would appear from these payments that the true selling price
of the land was P120,000.00, which was way above the market value stated in the
1973 tax declaration covering the property in question. There was an obvious reason for fixing the
consideration at only P80,000.00 in the disputed deed of sale. As the petitioner blandly admitted in her
brief, “the true consideration of sales of land are not usually placed in the
documents of conveyances to reduce the documentary stamps, the transfer tax
fees as well as other taxes chargeable relative thereto.”

The petitioner next asserts that if the deed of sale were
considered a contract of antichresis, the loan of P80,000.00 would be deemed
fully paid or offset by the rentals received by Almeda (or the private
respondents) from the 340 square-meter portion of the subject lot since 1973 up
to the present. The aggregate amount of
these rentals could be more than P211,400.00.

This contention is untenable.

The Civil Code provides:

Article 2132. By the
contract of antichresis the creditor acquires the right to receive the fruits of
an immovable of his debtor, with the obligation to apply them to the payment of
the interest, if owing, and thereafter to the principal of his credit.

Article 2134. The amount of
the principal and of the interest shall be specified in writing; otherwise, the
contract of antichresis shall be void.

There is no provision in the disputed document specifically
authorizing Almeda to receive the fruits of the land in question with the
obligation to apply them to the payment of interest if any was due, and to the
principal of the alleged loan. The
instrument also does not fix the amount of P80,000.00 as the petitioner’s
principal obligation.

Alvarez also stresses that she remained in actual possession of
the subject property and says this possession has given rise to the presumption
of an equitable mortgage. That
presumption cannot override her own judicial admission that Almeda was the new
owner of the property, having bought it from her way back in 1973. If Alvarez was indeed in possession, it was
because the property had been leased to her by Almeda, who in fact later sued
her for its recovery and payment of back rentals.

There is no merit in the private respondents’ submission that the
decision of the respondent court has already become final and executory. The petitioner received that decision on May
5, 1993, and so had until May 20, 1993, to file a motion for new trial or
reconsideration. The registry receipt
and the envelope containing her motion disclose that it was mailed on May 14,
1993, well within the period to stay enforcement of the judgment under review.

The private respondents’ contention that the petitioner failed to
comply with Par. 4 of Circular 1-88 is also untenable. The “verification” accompanying the petition
clearly states the material dates, i.e., the date of receipt of the
questioned decision, the date of filing of the motion for new trial and/or
reconsideration, and the date of receipt of the order denying such motion.

Our conclusion is that the respondent Court of Appeals committed
no error in sustaining the finding of the Regional Trial Court of Naga City
that the document executed between Josefa Almeda and Asuncion Juanir Vda. de
Alvarez was a deed of sale and not an equitable mortgage.

ACCORDINGLY, the petition is DENIED, with costs against
the petitioner. It is so ordered.

Davide, Jr., Bellosillo, Quiason, and
Kapunan, JJ., concur.

^[1]
Original Records, pp. 1-3.

^[2]
Ibid., pp. 6-9.

^[3]
Thru Judge Roberto C. Rañola, Rollo, pp. 22-37.

^[4]
Ibid., pp. 84-91; Benipayo, J., ponente, with Camilon and Martin, JJ., concurring.

^[5]
Exh. “B,” Original Record, p. 36.

^[6]
Exh. “1,” Original Record, pp. 261-264.

^[7]
Exh. “A,” Original Record, p. 35.

^[8]
Exh. “F,” Original Record, p. 41.

^[9]
Exh. “G,” Original Record, pp. 45-47.

^[10]
Exh. “I,” Original Record, pp.
54-56.

^[11] 31 C.J.S., pp. 1075-1076, 20 Am. Jur. 470.

^[12]
Sons of de la Rama v. Benedicto, 5 Phil. 512.

^[13]
TSN, September 25, 1989, p. 24-25.

^[14]
TSN, Ibid., pp. 27-28.

^[15]
Exh. “F,” Original Record, p. 41.

^[16]
Exh. “2,” Original Record, pp. 266-267.

^[17]
Tolentino, Arturo. Commentaries and
Jurisprudence on the Civil Code of the Philippines. Vol. V (1992), pp. 156-158.

^[18]
34 Phil. 100.

^[19]
TSN, September 25, 1989, pp. 28-29.

^[20]
Exh. “B,” Original Record, p. 36.

^[21]
Exh. “C,” Original Record,

^[22]
Exh. “D,” Original Record, p. 38.

^[23]
Exh. “E,” Original Record, p. 39.