ROBERTS vs PAPIO [515 SCRA 346]

GR. No. 166714 / February 09, 2007

Doctrine:
An option to buy or a promise to sell is different and distinct from the right of repurchase that
must be reserved by means of stipulations to that effect in the contract of sale.One repurchases
only what he previously sold- the right to repurchase presupposes a valid contract of
sale between the same parties.
Ponente:
Callejo, Sr.,J
Short Version:
Sps. Papio(Res) needed money to redeem subject property so they executed Deed
of Absolute Sale in favor of oberts (Pet). They then executed a 2year lease subject to renewal.
However Sps.Papio failed to pay monthly rentals (after expiration of lease), 2 demand letters,
Roberts instituted initial suit. Sps.Papio claims they repurchased the said land or
Equitable Mortgage. SC no its only a Contract of Sale, right to repurchase was not
reserved, and Papio admitted the existence of the sale in insisting he repurchased the land which
is incompatible with the defense of equitable mortgage.
Facts:
1.Sps. Martin and Lucina Papio owner 274sqm lot in Makati. They
mortgaged the same lot
t o Amparo investments for Php59K. They failed to pay, and the co. filed a pet for extrajudicial
foreclosure.
2 . To p r e v e n t t h e e x t r a j u d i c i a l f o r e c l o s u r e :
Deed of Absolute Sale April 13, 1982 in favor of Martin Papios cousin, Amelia
Roberts. For Php.85K (Php59K was paid to Amparao, Php26K kept by the Sps. Papio)
The loan with Amparo was settled.
3.2year contract of lease, subject to renewal, April 15,1982 Roberts: Lessor,
Papios: Lessee. Monthly rentals at Php8004.
4. July 6, 1982 TCT was issued in the name of Amelia Roberts
5.Papio paid rentals May1,1982 to May 1,1984 and thereafter for another year. He
then failed to pay further rentals but he remained in possession for almost 13years.
6 . J u n e 3 , 1 9 9 8 A m e l i a R o b e r t s l e t t e r t o P a p i o s r e m i n d i n g h i m t o p a y.
D e m a n d v a c a t e i f n o t settled in 15 days April 22,1999 2nd
demand letter. Again Papio refused to leave.
7.FILED: Unlawful detainer and damages against Papio MeTC Makati Roberts Stand:
She bought the land. Appended Deed of Abs Sale and Lease Contract Papio Stand: He had

Right to Repurchase/Equitable Mortgage. He asked Roberts to let him reacquire

property, she agreed, only then did he sign Deed of absolute sale. Pursuant to that
right, he repurchased land for Php250K which he gave to Perlita Ventura, Roberts representative
in Phil. Since Roberts was already in the US. (Problema na daw ni Roberts kung
hindi pala niremit sa kanya ni Ventura yung Php.250K) Roberts Reply: She did not know
about the Php250K given to Ventura. She offered to sell property to Papio in 1984 for
US $15K, but he refused.
8.MeTC: Odered Papio to vacate premises. Roberts merely tolerated the stay of
Papio after the expiration of the contract. Right to repurchase was not reserved by
Papio when he signed the Deed of abs. sale. RTC: Affirmed CA: Reversed. It was an
equitable mortgage because he retained ownership and its peaceful possession.
Issue:
What is the nature of the Deed of Absolute Sale Contract of sale/Contract of sale
with right to repurchase/Equitable mortgage?
Decision:
It was a simple Contract of Sale.
1.Papio in his affidavits and position papers, said that petitioner granted him the
right to repurchase and which he did in fact exercise. This claim is antithetical to an equitable
mortgage.
2.Equitable Mortgage-mortgagor retains ownership but subject to foreclosure and
sale at public auction upon failure of the mortgagor to pay his obli.
a) Parties entered into a contract denominated as Contract of Sale
b) Intention w a s t o s e c u r e a n e x i s t i n g d e b t b y w a y o f M o r t g a g e i n t e n t i o n i s t h e decisive factor.
3.Pacto de Recto Sale (Sale with right to repurchase)- Ownership
i s t r a n s f e r r e d t o t h e b u y e r, subject to right of vendor to repurchase. (note TCT
was issued to Roberts: proof of transfer of ownership)
4.One can repurchase only what one has previously sold.
-By insisting that he has repurchased, Papio had admitted that the Deed of Absolute Sale isnot an
equitable mortgage.
-This is buttressed by the Lease Contract
5.Villarica et al v. CA - The right of repurchase must be reserved by vendor in the
same instrumentof sale as one of the stipulations of the contract.
-This right was not reserved in the Deed
N e o t h e r i s t h e r e a n y d o c u m e n t a r y e v i d e n c e s h o w i n g t h a t Ven t u r a w a s
a u t o r i z e d t o sell/resell land at Php250K/receive said amount as purchase price of the property.
-Payment to Ventura was Void.
-Papio failed to prove that negotiations culminated in his offer to buy the property at
Php250K.Only offer on record is the take it or Leave it at US$15K in May1984.

6 . T h e r e w a s N O c o n t r a c t o f s a l e / r e p u r c h a s e b e t w e e n P a p i o a n d Ven t u r a
( a s v e n t u r a w a s n o t authorized to do the same)
WHEREFORE CA REVERSED. MeTC AFFIRMED. It was a Contract of Sale. No right
to repurchase. Not Equitable Mortgage.

Boston Bank of the Philippines vs Perla Manalo and Carlos Manalo, Jr.
G.R. No. 158149, February 9, 2006
FACTS:
1. Xavierville Estate, Inc. (XEI) sold to The Overseas Bank of Manila (OBM)some residential
lots in Xavierville subdivision. Nevertheless, XEI continued selling the residential lots in the
subdivision as agent of OBM.
2. Carlos Manalo, Jr. proposed to XEI, through its President Emerito Ramos(Ramos), that he will
purchase two lots in the Xavierville subdivision and offered as part of the down payment the
P34,887.66 Ramos owed him. XEI, through Ramos, agreed.
3. In a letter dated August 22, 1972 to Perla Manalo (Carlos wife), Ramos confirmed the
reservation of the lots. In the letter he also pegged the price of the lots at P348,060 with a 20%
down payment of the purchase price amounting to P69,612.00 (less the P34,887.66 owing from
Ramos), payable as soon as XEI resumes its selling operations; the corresponding Contract
of Conditional Sale would then be signed on or before the same date. Perla Manalo conformed to
the letter agreement.
4. Thereafter, the spouses constructed a house on the property. The spouses were notified of
XEIs resumption of selling operations. However, they did not pay the balance of the down
payment because XEI failed to prepare a contract of conditional sale and transmit the same to
them. XEIalso billed them for unpaid interests which they also refused to pay. XEI turned over
its selling operations to OBM.
5. Subsequently, Commercial Bank of Manila (CBM) acquired the Xavierville Estate from
OBM. CBM requested Perla Manalo to stop any on-going construction on the property since it
(CBM) was the owner of the lot and she had no permission for such construction. Perla informed
them that her husband had a contract with OBM, through XEI, to purchase the property. She
promised to send CBM the documents. However, she failed to do so. Thus, CBM filed a
complaint for unlawful detainer against the spouses. But later on, CBM moved to withdraw its
complaint because of the issues raised. In the meantime, CBM was renamed the Boston Bank of
the Philippines.
6. Then, the spouses filed a complaint for specific performance and damages against the bank
before the RTC. The spouses alleged that they had always been ready and willing to pay the
installments on the lots sold to them but no contract was forthcoming. The spouses further
alleged that upon their partial payment of the down payment, they were entitled to the execution
and delivery of a Deed of Absolute Sale covering the subject lots. During the trial, the spouses
adduced in evidence the separate Contracts of Conditional Sale executed between XEI and 3
other buyers to prove that XEI continued selling residential lots in the subdivision as agent of
OBM after the latter had acquired the said lots.
RTC :
The trial court ordered the petitioner (Boston Bank) to execute a Deed of Absolute Sale in favor
of the spouses upon the payment of the spouses of the balance of the purchase price. It ruled that

under the August 22, 1972letter agreement of XEI and the spouses, the parties had a "complete
contract to sell" over the lots, and that they had already partially consummated the same.
CA:
The Court of Appeals sustained the ruling of the RTC, but declared that the balance of the
purchase price of the property was payable in fixed amount son a monthly basis for 120 months,
based on the deeds of conditional sale executed by XEI in favor of other lot buyers. Boston Bank
filed a Motion for the Reconsideration of the decision alleging that there was no perfected
contract to sell the two lots, as there was no agreement between XEI and the respondents on the
manner of payment as well as the other terms and conditions of the sale. Boston Bank also
asserts that there is no factual basis for the CA ruling that the terms and conditions relating to the
payment of the balance of the purchase price of the property (as agreed upon by XEI and other
lot buyers in the same subdivision) were also applicable to the contract entered into between the
petitioner and the respondents. CA denied the MR.
ISSUES:
1.) Whether or not the factual issues raised by the petitioner are proper
2.) Whether or not there was a perfected contract to sell the property
3.) Whether or not the CA correctly held that the terms of the deeds of conditional sale executed
by XEI in favor of the other lot buyers in the subdivision, which contained uniform terms of 120
equal monthly installments, constitute evidence that XEI also agreed to give the Manalo spouses
the same mode and timeline of payment. (Evidence, Disputable Presumptions, Habits and
Customs Rule 130, Section 34)
HELD:
1.) YES. The rule is that before this Court, only legal issues may be raised in a petition for
review on certiorari. The reason is that this Court is not a trier of facts, and is not to review and
calibrate the evidence on record. Moreover, the findings of facts of the trial court, as affirmed on
appeal by the Court of Appeals, are conclusive on this Court unless the case falls under any of
the following exceptions. A careful examination of the factual backdrop of the case, as well as
the antecedently proceedings constrains us to hold that petitioner is not barred from asserting that
XEI or OBM, on one hand, and the respondents, on the other, failed to forge a perfected contract
to sell the subject lots.
2.) NO. In a contract to sell property by installments, it is not enough that the parties agree on the
price as well as the amount of down payment. The parties must, likewise, agree on the manner of
payment of the balance of the purchase price and on the other terms and conditions relative to the
sale. Even if the buyer makes a down payment or portion thereof, such payment cannot be
considered as sufficient proof of the perfection of any purchase and sale between the parties. A
contract of sale is perfected at the moment there is a meeting of the minds upon the thing which
is the object of the contract and the price. The agreement as to the manner of payment goes into
the price, such that a disagreement on the manner of payment is tantamount to a failure to agree
on the price. We have meticulously reviewed the records, including Ramos February 8, 1972
and August 22, 1972 letters

to respondents and find that said parties confined themselves to agreeing on the price of the
property (P348,060.00), the 20% down payment of the purchase price (P69,612.00), and credited
respondents for the P34,887.00 owing from Ramos as part of the 20% down payment. Based on
these two letters, the determination of the terms of payment of the P278,448.00 had yet to be
agreed upon on or before December 31, 1972, or even afterwards, when the parties sign the
contract of conditional sale. So long as an essential element entering into the proposed obligation
of either of the parties remains to be determined by an agreement which they are to make, the
contract is incomplete and unenforceable.
3.) NO. The bare fact that other lot buyers were allowed to pay the balance of the purchase price
of lots purchased by them in 120 or 180 monthly installments does not constitute evidence that
XEI also agreed to give the respondents the same mode and timeline of payment. Under Section
34, Rule 130 of the Revised Rules of Court, evidence that one did a certain thing at one time is
not admissible to prove that he did the same or similar thing at another time, although such
evidence may be received to prove habit, usage, pattern of conduct or the intent of the parties.
Habit, custom, usage or pattern of conduct must be proved like any other facts. The offering
party must establish the degree of specificity and frequency of uniform response that ensures
more than a mere tendency to act in a given manner but rather, conduct that is semi-automatic in
nature. The offering party must allege and prove specific, repetitive conduct that might constitute
evidence of habit. The examples offered in evidence to prove habit, or pattern of evidence must
be numerous enough to base on inference of systematic conduct. Mere similarity of contracts
does not present the kind of sufficiently similar circumstances to outweigh the danger of
prejudice and confusion. In determining whether the examples are numerous enough, and
sufficiently regular, the key criteria are adequacy of sampling and uniformity of response. It is
only when examples offered to establish pattern of conduct or habit are numerous enough to lose
an inference of systematic conduct that examples are admissible. Respondents failed to allege
and prove that, as a matter of business usage, habit or pattern of conduct, XEI granted all lot
buyers the right to pay the balance of the purchase price in installments of 120 months of fixed
amounts with pre-computed interests, and that XEI and the respondents had intended to adopt
such terms of payment relative to the sale of the two lots in question. Indeed, respondents
adduced in evidence the three contracts of conditional sale executed by XEI and other lot buyers
merely to prove that XEI continued to sell lots in the subdivision as sales agent of OBM after it
acquired said lots, not to prove usage, habit or pattern of conduct on the part of XEI to require all
lot buyers in the subdivision to pay the balance of the purchase price of said lots in 120 months.

Sps. Tito Alvaro And Maria Valelo Vs. Sps. Osmundo Ternida And Julita Returban
G.R. No. 166183, 20 January 2006
FACTS:
1. On May 26, 1986, Julita mortgaged the land to spouses Salvador de Vera and Juanita
Orinion for P28,000. She signed a mortgage document that provides Julita with 3
years to repurchase the land from the date of execution.
2. After a year, Salvador executed a Deed of Transfer of Mortgage in favor of spouses
Jose Calpito and Zoraida Valelo for P32,000. Julita requested P3,000 additional from
Jose Calpito and Zoraida Valelo. Julita signed a Deed of Sale with Right to
Repurchase.
3. On May 22, 1990, Julita asked for an additional P1,000 from Calpito, but Calpito told
her that they transferred the mortgage to Tito Alvaro and Maria Valelo. Julita asked
for P1,000 from Alvaro, and she was asked to sign a Deed of Absolute Sale whom she
thought at that time was a mortgage document.
4. Julita tried to redeem the property from Alvaro but she was refused. Alvaro claimed
that they purchased the property and were issued a Tax Declaration No. 2747.9
5. October 1, 1997, Julita filed a complaint for Annulment of Deed of Sale Documents
and Tax Declaration No. 2747 w/ RTC. Trial court dismissed the complaint for lack of
cause of action. Julita filed a motion for reconsideration but was denied.
6. On appeal, Court of Appeals (CA) reversed the decision of the RTC in dismissing the
case of Julita. CA decided that the Deed of Absolute Sale dated May 22, 1990 that
was signed by Julita in favor of Alvaro must be construed as an equitable mortgage,
giving Julita the right to redeem the property which would take effect upon payment
of their mortgage to Alvaro.
ISSUES:
1. Did the CA committed an error in law when it declared the transaction
between the
parties as equitable mortgage and not an absolute sale;
2. Did the CA committed an error in law when it declared the annulment of tax
declaration 2747 in the names of the petitioners;
3. Did the CA committed an error in law when it failed to apply the jurisprudential rule
laid down in abilla vs. gobonseng, jr., 374 scra 51;
4. Did the CA committed an error in law when it failed to apply the principle of laches
and estoppel;
5. Did the CA committed an error in law when it failed to award damages in favor of the
petitioners.
RULING:
1. The decision of the CA was sustained. The transaction between Julita and Alvaro in
May 22, 1990 was an equitable mortgage and not an absolute sale.
The Deed of Absolute Sale that Julita signed did not define Julitas intention of totally
conveying the ownership of the property to Alvaro. The true intention of Julita in the

execution of the Deed of Absolute Sale was not to convey the ownership of
property to Alvaro but merely to secure the loan obtained by Julita as seen in
circumstances surrounding the execution and performance of the terms of
contracts which Julita was made to sign involving the subject property,
inconsistent with the theory that the property was sold.

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KWONG vs GARGANTOS
G.R. NO. 152984 NOVEMBER 22, 2006
FACTS:
Petitioner William G. Kwong is the owner of fifteen (15) lots located in
the province of Pampanga. In an notarized Deed of Conditional Sale, petitioner, for
himself and in behalf of William G. Kwong Management, sold said lots to respondents
Anacleto Gargantos, Remy Santos and Lorna Arceo for the sum of $137,255.00
payable in two installments, with $10,000.00 being paid by respondents at the time of
the execution of the contract, and the balance of $127,255.00 to be paid on or
before December 15, 1986. When respondents failed to pay the balance on the
expected date, it was subsequently agreed that the same shall be paid on a staggered
basis starting March 1989. Respondents, however, again failed to comply with their
obligation. This compelled petitioner to write a letter of demand, through counsel,
on November 16, 1989, asking respondents compliance with their monetary obligation;
otherwise, the contract shall be rescinded. The letter was addressed to respondent
Gargantos. There being no reply, another letter of demand dated February 21,
1990 was sent.
On May 1, 1990, Atty. Ramon Gargantos (brother of respondent Anacleto Gargantos),
armed with a Special Power of Attorney executed by respondents, paid the amount
of P1,776,200.00.[ Thereafter, petitioner and Atty. Gargantos executed a notarized
Deed of Absolute Sale, wherein petitioner sold to respondent Gargantos 11 out of the 15
lots for the sum of P500,000.00, and Atty. Gargantos signed a Promissory Note for the
payment of the amount of P373,074.95, on or before June 30, 1990, representing the
unpaid balance of the purchase covering the remaining four lots.
Again, respondent Gargantos failed to pay the agreed amount, forcing petitioner to write
subsequent demand letters on November 12, 1990, November 10, 1994, October 15, 1995, and
July 29, 1996. Respondent Gargantos, through counsel, finally answered,
claiming that it was petitioner who did not comply with his undertaking to transfer 11 of
the 15 titles to respondents prior to the payment of the balance, with the remaining four
titles to be transferred afterwards.
Petitioner then wrote respondents on September 15, 1996 asking for a conference in
order to settle the matter. In a letter dated November 12, 1996, respondent Gargantoss
counsel reiterated his demand for the delivery of the 11 titles, failing which a complaint
for specific performance with damages and a criminal case for estafa will be filed
against petitioner.
On November 14, 1996, petitioner filed before the Regional Trial Court (RTC)
of Angeles City, Branch 62, a complaint for the rescission of the Deed of Conditional
Sale and forfeiture of all the payments made by respondents against herein
respondents.

ISSUE:
Whether or not the said deed of conditional sale has been superseded or
novated by the subsequent execution of the deed of absolute sale dated May 1, 1990.
HELD:
Novation is the extinguishment of an obligation by the substitution or change of
the obligation by a subsequent one which extinguishes or modifies the first, either by
changing the object or principal conditions, or, by substituting another in place of the
debtor, or by subrogating a third person in the rights of the creditor.
Under Article 1292 of the Civil Code, in order that an obligation may be extinguished by
another which substitutes the same, it is imperative that it be so declared in unequivocal
terms, or that the old and the new obligations be on every point incompatible with each
other. The parties to a contract must expressly agree that they are abrogating their old
contract in favor of a new one. In the absence of an express agreement, novation takes
place only when the old and the new obligations are incompatible on every point. The
test of incompatibility between two obligations or contracts is whether or not they can
stand together, each one having an independent existence. If they cannot, they are
incompatible, and the later obligation novates the first.
In this case, an examination of the Deed of Absolute Sale and the Promissory Note, as
well as the surrounding circumstances of this case, shows that it was meant to novate
and replace the Deed of Conditional Sale. Logically, the Deed of Conditional Sale and
the Deed of Absolute Sale cannot co-exist as these are of different nature and provide
for separate and distinct obligations.
It is well-settled that if the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulations shall control;
however, if the contract appears to be contrary to the evident intentions of the
parties, the latter shall prevail over the former. Moreover, the agreement of the parties
may be embodied in only one contract or in two or more separate writings. In such
event, the writings of the parties should be read and interpreted together in such a way
as to render their intention effective