MAURICIO N. CACHOLA, SR., REPRESENTED BY HIS ATTORNEY-IN-FACT, NILO C. CACHOLA, PETITIONER, VS. HON. COURT OF APPEALS AND SPS. FEDERICO BRIONES AND TRINIDAD ENCINAS, RESPONDENTS.

The issue raised in this petition is whether the contract
involving the real property in this case, i.e., a house and lot, at No. 10
Langka St., Project 2, Quezon City with an area of 236.30 square meters, is one
of sale or an equitable mortgage.

On July 30, 1973,
the respondent spouses Federico Briones and Trinidad Encinas, as the registered
owners of the above-named property under Transfer Certificate of Title (TCT)
No. 72398 mortgaged the same to Benjamin Ocampo as a security for a loan of
P15,000.00. For failure of the spouses
to pay the loan, Ocampo caused the foreclosure of the real estate mortgage and
the subsequent sale of the property at public auction. Ocampo being the highest bidder, purchased
the property at the auction. A
certificate of sale was executed in his favor.

The respondents were able to exercise their right of redemption
within the one-year period from the auction sale by paying P19,876.80 plus
accrued interests and taxes. This was
made possibIe through a loan of P40,000.00 obtained from petitioner, the late
Mauricio Cachola and his co-defendant in Civil Case No. Q-45163 for annulment
of deed of sale, Angelina Alfaras. This
second loan was evidenced by a promissory note executed by the spouses Briones
duly signed by them dated March 11, 1975, but subscribed before a notary public
on March 13, 1975. The promissory note
states:

March 11, 1975

P40,000.00

Six (6) months after date, we promise to pay to the Order of
MAURICIO N. CACHOLA the sum of FORTY THOUSAND PESOS (P40,000.00), Philippine
Currency, plus 1% interest per month, subject to the terms and conditions of
the agreement (Kasunduan) which was executed by the parties. Value received.

(SGD) FEDERICO V.
BRIONES                                        (SGD)
TRINIDAD E. BRIONES

The loan was also
evidenced by a “Kasunduan” (Records, pp. 244-245) between the
petitioners, on the one hand, and the respondent spouses, on the other signed
on March 13, 1975 containing the same stipulation for payment. The Kasunduan recognized the full ownership
by the respondents. There was also a
stipulation that after the properties shall have been redeemed from Ocampo, the
title should be placed in the hands of Cachola for the purpose of securing the
loan. Hence, another real estate
mortgage was entered into by virtue of the Kasunduan over the same house
and lot in favor of petitioner Cachola. TCT No. 72398 was placed under the custody of Angelina Alfaras on behalf
of the petitioner.

The respondent spouses failed to pay any amount within the
stipulated six month period and even afterwards.

On January 30, 1976, petitioner executed a Release of Mortgage
(Exhibit “4” for the defendants, See Records, p. 420). A Deed of Absolute Sale of the properties
(Exhibit “5”, Records, p. 421) was entered into by the parties for
P60,000.00, on the same date. TCT No.
72398 in the name of Federico Briones was cancelled and TCT No. 216104 was
issued by the Register of Deeds of Quezon City in favor of Mauricio Cachola.

Sometime in 1977, the petitioner filed an unlawful detainer suit
against the respondents-spouses before the City Court of Quezon City, Br.
III. In February of 1978, the latter
were ejected by the court sheriff on the strength of a writ of execution.

In June 1979, the respondents filed a suit for annulment of the
deed of absolute sale and annulment of the unlawful detainer judgment before
the Court of First Instance – Rizal, Quezon City, Br. XVIII. This case was dismissed, without prejudice
on February 24, 1981 for failure to prosecute.

On November 9, 1981, the subject property was conveyed by Cachola
to his son Ebenezer Cachola by way of donation inter vivos. The transfer by donation was registered with
the Register of Deeds of Quezon City so that TCT No. 216104 of Mauricio Cachola
was cancelled and a new one, TCT No. 339434 in the name of Ebenezer Cachola was
issued.

On June 10, 1985, the respondents filed the instant case, Civil
Case No. Q-45163 against the petitioner and Angelina Alfaras before the
Regional Trial Court, Quezon City, Branch 76 again for: annulment of the deed of absolute sale,
cancellation of TCT No. 216104 of the petitioner and annulment of the unlawful
detainer judgment. The trial court
ruled that the action for annulment of the deed of sale on the ground of fraud
had already prescribed, and that the contract entered into was not one of
absolute sale but an equitable mortgage because of the gross inadequacy of the
price of the sale. Thus, it ordered the
cancellation of TCT No. 216104 issued in the name of Mauricio Cachola and the
subsequent deed of donation, and the revival of TCT No. 72398. The court also ordered Cachola to reimburse
the balance of rentals received from the lease on the property after the
respondents vacated it.

On appeal, the decision of the trial court was affirmed with
modifications. Hence, this petition for
review on certiorari.

On July 29, 1991, this Court denied the petition in a minute
resolution. However, after carefully
reviewing the records in view of the grounds raised in the motion for
reconsideration, we gave it due course.

It is a general rule that in cases appealed from the Court of
Appeals through a petition under Rule 45 of the Rules of Court, the Supreme
Court limits itself to the review of errors of law and accepts the factual
findings of the appellate court as more or less conclusive. The rule, however, is subject to certain
exceptions which constrain the Court to make its own determination of the facts
of the case. Among the exceptions are: “(1) when the conclusion is a finding
grounded entirely on speculations, surmises or conjectures; (2) when the
inference made is manifestly absurd, mistaken or impossible; (3) when there is
grave abuse of discretion in the appreciation of facts; (4) when the judgment
is premised on a misapprehension of facts; (5) when the findings of fact are
conflicting; and (6) when the Court of Appeals in making its findings went
beyond the issues of the case and the same is contrary to the admissions of
both appellant and appellee.” (Ronquillo v. Court of Appeals, 195 SCRA 433
[1991]; Bunag v. Court of Appeals, et al., 158 SCRA 299 [1988]).

After a careful re-examination of the records as well as the
decisions of the two courts below, the Court is convinced that the evidence is
wanting to substantiate the conclusion that a contract which in form and
substance is a deed of sale is actually an equitable mortgage.

The questioned decision is based on the following: 1) the gross inadequacy of the price; 2) the
fact that the respondents-vendors remained in possession of the property after
the execution of the questioned deed of absolute sale; and 3) the respondents,
being old and knowing no English, could not have intelligently understood the
document they signed.

The petitioner contends that the trial court relied heavily and
solely upon the self-serving testimony of Federico Briones who stated that he
could not have sold the property for P60,000.00 to the petitioner because he
had refused to sell it to Benjamin Ocampo for P75,000.00 – a price he regarded
to be far lower than his alleged selling price of P400,000.00. (TSN, August 20, 1987, p. 6) The petitioner
asserts that the statement of Federico Briones was not corroborated by other
evidence. Therefore, it should not have
been given credit. He said that the
failure to present Ocampo to prove the latter’s offer to buy and Briones’
refusal to accept it for a consideration of P75,000.00, or the non-presentation
in court of a realtor or the city assessor who could render expert opinion to
confirm the correctness of Briones’ supposed selling price according to 1976
prices, only means that such other persons’ testimony would otherwise be
adverse to the position of respondents if given.

We agree with the petitioner. It is not clear from the sole testimony of the respondent himself why
somebody should offer to buy his house and lot worth P400,000.00 for only
P75,000.00. There is nothing in the
records that show that the house and lot in Project 2 were worth P400,000.00 in
1976. Nowhere in the text of the trial
court decision is there a basis to show that the stipulated price of P60,000.00
is below the market values prevailing in 1976 for a house and lot in Quezon
City with an area of 236.30 square meters. The inference deduced by the trial court would have been convincing and plausible
had there been a standard or guide with which a person can reasonably determine
the contract price to be truly abnormally inadequate. Without that standard, a judgment attaching great weight to the
lone testimony of Federico Briones on that point stands on shaky grounds.

The Court holds that even assuming that the consideration was
below standard, it was not unusually inadequate during that time. Besides, inadequacy of the price does not by
itself support the conclusion that the property was not at all sold to the
petitioner or that the contract was a loan. Inadequacy is not sufficient to set aside a sale unless it is purely
shocking to the conscience (Vda. de Cruzo v. Carriaga, 174 SCRA 330 [1989]; and
Prudential Bank v. Martinez, 189 SCRA 612 [1990]).

An equitable mortgage is “one which although it lacks some
formality, form of words or other requisites prescribed by a statute, show(s)
the intention of the parties to charge a real property as security for a debt
and contains nothing impossible or contrary to law.” (Vda. de Zulueta v.
Octaviano, 121 SCRA 314 [1983], quoting Outline of Civil Law, J.B.L. Reyes and
R.C. Puno)

The plain terms of the Deed of Absolute Sale of January 30, 1976
(Exhibit “E” for the plaintiffs?petitioners) and the
circumstances of the case do not suggest an unequivocal intention to make the
property answerable for the P40,000.00 debt after the lapse of the six-month
period from March 13, 1975 to September 13, 1975 within which the respondent
spouses were expected to pay their obligation. There was nothing to show an agreement that the parties recognized the
continued ownership of the spouses Briones.

The words of the contract are clear and leave no doubt as to the
desire of the spouses to transfer the property by way of sale to the
petitioner. No other meaning could be
given to the terms and stipulations of the contract but their literal
meaning. (Article 1370, New Civil
Code). The contract was proper in form. It was properly executed and signed by each
of the spouses and by Cachola on its second page as well as on the left hand
margin of every page. It was
acknowledged by a notary public. The
contract stipulates:

“That the VENDORS have offered to sell to the VENDEE and the
latter agreed to buy from the former the said portion of land and house and all
with all the buildings and improvements existing thereon, covered by Transfer
Certificate of Title No. 72398.

“That for and in consideration of the sum of SIXTY THOUSAND
(P60,000.00) Pesos, Philippine Currency, which the VENDORS hereby SELL, CONVEY,
and TRANSFER by way of Absolute Deed of Sale to the said VENDEE, his heirs,
administrators, assigns, upon the signing of this Deed such receipt of the full
amount thereof is being acknowledged by the herein VENDORS with their signatures
herein below;

“That the above property is free from all liens and
encumbrances;

“WHEREFORE, for and in consideration of the foregoing
premises, and of the sum of SIXTY THOUSAND PESOS (P60,000.00) Philippine
Currency, the VENDORS hereby SELL, CONVEY and TRANSFER by way of Absolute Deed
of Sale, the above cited parcel of land together with all the buildings and
improvements existing thereon, with an area of TWO HUNDRED THIRTY SIX SQUARE
METERS AND THIRTY DECIMETERS (236.30), unto the above named VENDEE, his heirs,
administrators and/or assigns.” (Rollo, p. 421)

No intention to the contrary can be derived especially if we
consider further the release of the real property mortgage constituted through
the Kasunduan. The existence of the
Release of Mortgage was never disputed by the respondents. In that document, petitioner discharged the
mortgage for P40,000.00, an amount which he stated therein to have been
received in full by the respondents. (See Records, p. 420, Release of Mortgage).

The petitioner asserts that the release was executed only because
the respondents offered to sell the house and lot to him after the expiration
of the period for them to pay. The
Court finds merit in the contention of the petitioner as this fact was not denied
by the respondents with supporting evidence. The respondents denied having actually sold the property by alleging
lack of knowledge and correct understanding of the papers they signed. They claimed to have been cheated on account
of their lack of sufficient education and knowledge of English. Their alleged ignorance of the documents is,
however, doubtful considering the inconsistencies as to which among the
documents, i.e., the Kasunduan, the Promissory Note, and the Deed of Absolute
Sale, each of the spouses signed in blank. (TSN, August 27, 1987, pp. 21-24, pp. 27-28) While admitting the
specimen signatures to be theirs, they expressed incredulous surprise as to how
some of those signatures appeared on certain pages of the documents. (TSN, August 27, 1987, p. 18; TSN, October
26, 1987, p. 20) They claimed to have been invited by Angelina Alfaras to the
house of one Atty. Pablo Atienza to sign a Kasunduan and a promissory note
without receiving the full value of the loan. They claimed that the blank paper they signed was made part of a spurious
document.

In all the instances in
which the respondents were requested to sign, there was, however, no proof that
they were pressured, forced or intimidated by Alfaras or Atty. Atienza. To bolster the fact that there was no sale
agreed upon, they insist on their having been persuaded to sign because of a
promise to be given the balance of P20,124.20 out of the P40,000.00 loan. They argue that they had so far received
only the P19,876.80 that was used to redeem the property from Ocampo. Apart from these allegations and testimonies
referring to “deceitful manipulations,” the respondents showed no
other evidence.

The allegations of respondents were given in negative form
regarding the existence of the Deed of Absolute Sale. It is a rule that: “When a negative is averred in a pleading, or a plaintiff’s case
depends upon the establishment of a negative, and the means of proving the fact
are equally within the control of each party, then the burden of proof is upon
the party averring the negative.” (Francisco, Vicente on Evidence, Vol.
VII, Revised Rules of Court, 1973, p. 13, citing 2 Jones on Evidence, Sec. 494)
In this case, the burden of proof was upon the respondents who deny having
signed a deed of sale which they claim was fictitious and fraudulently obtained
by the petitioner and Ms. Alfaras.

The Court is of the opinion that the respondents’ attempts to
establish the fact of having been misled into selling are woefully
inadequate. The respondents wanted to
nullify later what they fully knew at the time of the contract would deprive
them of ownership as a consequence.

The fact that the respondents-vendors remained for a while in
possession of the property is not a compelling reason to depart from the view
that there was indeed a sale. A
mortgagee who decides to discharge a mortgage and who directly purchases the
property from the mortgagors upon an offer to sell, instead of resorting to
foreclosure proceedings, will naturally want to take possession over the
property. Unless by simple tolerance or
by contract of lease he allows other persons to occupy the premises, he has
every right to use it for his own purposes and reap income therefrom. The petitioners state that they were not too
happy about the respondents not moving out within a short period from the sale
and the fact that they had to file an ejectment suit. The subsequent filing of an ejectment suit after a year during
which the respondents withheld possession indicates an assertion of the right
of new ownership by the petitioner. The
payment of realty taxes by the petitioner as owner also establishes the fact
that there was really a disposition in his favor by way of sale. (Vda. de Zulueta v. Ortaviano, supra)
The respondents cannot therefore sweepingly expect us to rely on their continued
occupancy to prove that there was only a loan.

The Court is not impressed that the true intention of the parties
was only to charge the property as a security for a debt. If the questioned contract was an equitable
mortgage, why would the amount appear therein to be P60,000.00 instead of
P40,000.00? Does that mean that the
P40,000.00 loan was thereafter novated or increased by P20,000.00
notwithstanding their insistence that out of the original amount, only the P19,876.80
necessary to redeem the property from the first mortgagee was received from
Cachola and Alfaras?

It is hard to believe the respondents’ theory that after having
been fooled into signing a promissory note without actually receiving the
balance of what was being borrowed, they would have willingly submitted
themselves to another precarious situation in which they would irresponsibly
affix their signatures on a “blank piece of paper.” Their
propositions are readily overcome just by looking at the face of the subject
contract which contains the legibly written signatures of the
respondents-spouses not only on the spaces above the typewritten names on page
two of the deed of absolute sale but also on the left hand margin of each of
the two paged document and which appears regular in every respect. (See Records, pp. 421-422)

The Court concludes that the respondents were fully aware of the
contents and meaning of the three documents they signed including the Deed of
Absolute sale. There was no act done or
event that occurred simultaneous to, or after the execution of the contract of
sale that would manifest the intention of the parties to have been otherwise,
and that would alter substantially the vendor-vendee relations between the
parties expressly stated in the agreement. The contract could not have been a reiteration of the mortgage for the
P40,000.00 loan, the period for payment of which had already lapsed since
September 13, 1975. The debt was
overdue as of the date of execution of the sale on January 30, 1976.

The contents of the written contract are replete with all the
terms agreed upon. The vendors freely
consented to the sale and agreed to the amount of consideration. The vendee, on the other hand, made certain
that the agreement was put in a public instrument duly signed by all the
parties involved, witnessed by at least two other persons of legal age and
notarized.

Years after the execution of the deed, the respondents did not do
anything to question the alleged grossly inadequate price in the contract. Their action filed in June 1985 to annul the
deed of absolute sale and the judgment for eviction is rather belated. The lower court correctly ruled that the
suit had prescribed. Thus, the contract
of sale was not rendered invalid by the silence of the respondents.

Worthy of note is the finality and satisfaction of the judgment
of eviction at the time the case was filed first in 1979 and then again in
1985. We have ruled in Alvendia v.
Intermediate Appellate Court, 181 SCRA 252 [1990] that
“there is no justification in law and in fact for the reopening of a case
which has long become final and which has in fact been executed.” In that
case, the petitioner therein assailed the appellate court’s order allowing the
judgment debtors in a case for collection of a sum of money to pay the judgment
debt in cash long after their failure to redeem the properties sold on
execution. In effect, the appellate
court nullified the execution of the trial court judgment. The Court applies the same ruling to the
instant case where the unlawful detainer judgment has long been satisfied:

“Time and again this Court has said that the doctrine of
finality of judgments is grounded on fundamental considerations of public
policy and sound practice that at the risk of occasional error the judgments of
courts must become final at some definite date fixed by law.

x x x x x x x x x

“x x x Hence, as ruled by this Court, when judgment has been
satisfied, the same passes beyond review, for satisfaction thereof is the last
act and end of the proceedings.” (Alvendia v. IAC, pp. 261-263)

The argument pointing to the alleged violation of the
respondents’ right to due process in not having been notified of the existence
of the ejectment suit, the pleadings filed, the processes, judgment and writ of
execution is of no moment. The spouses’
Briones knew all along that they were occupying the premises not anymore in the
concept of owner but only as mere possessors because they had sold the
property. They should have expected the
ouster as a consequence.

Considering that the price of the deed was not extraordinarily
inadequate, that it was the vendee who paid the realty taxes due on the
property, and that the vendors were not the lawful possessors thereof prior to
their eviction, the Court is constrained to uphold the validity of the contract
of sale in favor of petitioner Mauricio Cachola and the subsequent donation inter vivos
to Ebenezer Cachola. The issuance of
TCT No. 216104 in the name of the petitioner, the registration of the deed of
donation, and the issuance of TCT No. 339434 in the name of Ebenezer Cachola
are valid.

In view of the foregoing, the Court holds that none of the
circumstances in Article 1602 of the Civil Code which would raise the
presumption of equitable mortgage, in relation to Article 1604 of the same Code
pertaining to a contract purporting to be an absolute sale, exists in the case
at bar. All discussions made by the
respondent court on rentals being considered as interest are rendered
irrelevant.

At this point the Court finds the award of P10,000.00 to
respondents as attorney’s fees to be without factual and legal basis. The petitioner has not acted in any manner
that compelled the plaintiffs?respondents to litigate or incur expenses
to protect their interests. If at all,
it was the petitioner who was constrained to defend himself and appeal his case
up to this Court.

WHEREFORE, the petition is hereby GRANTED and the decision
of the respondent Court of Appeals is SET ASIDE and REVERSED. The deed of donation executed by Mauricio N.
Cachola in favor of Ebenezer C. Cachola and the Transfer Certificate of Title
No. 339434 issued in the name of the latter are ordered retained in the records
of the Register of Deeds of Quezon City.

Feliciano, Bidin, Davide, Jr., and
Romero, JJ., concur.