Facts:

This case, Florencio Balatero and Heirs of Josefa Badelles v. Intermediate Appellate Court and Juan Veloso, arose from a dispute over the ownership of Lot Numbers 433-A and 433-B in Iligan City, designated within the Iligan Cadastral 292. The proceedings were initiated at the behest of the Director of Lands to settle claims over 1419 lots, with the case being filed on September 30, 1987. Claimants for Lot No. 433 included Florencio Balatero and the heirs of Josefa Iglupas Badelles, along with Juan A. Veloso and Anacleto Iglupas.

The trial court found that Lot 817 was reserved for public use, as it was designated for the widening of a national street, thus not subject to private ownership. The historical background established that the property belonged originally to Josefa Iglupas's parents and was sold to her in 1968 by Tomasa Ronda and her son Severo. Following this, Josefa Iglupas and her family occupied the property, where they built and resided until her death in 1967.

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Facts:

Property Background and Chain of Title

• The subject parcel, Lot 433 of Iligan Cadastral 292, originally belonged to the parents of Josefa Iglupas.
• Upon the death of her parents, Lot 433 was conferred to Alejo Iglupas, who, together with his wife Tomasa Ronda, came into possession of the land.
• In 1918, Tomasa Ronda, along with her son Sovero, sold the property to Josefa Iglupas and her husband Juan Badelles as evidenced by the public document “Escritura de Compra Venta.”
• Subsequent transactions included the subdivision and allocation of the lot into Lot 433-A and Lot 433-B, with Lot 433-A designated for Florencio Balatero (who acquired it through purchase from Josefa Iglupas and other relatives) and Lot 433-B designated for the heirs of Josefa Iglupas.

Subdivision, Occupation, and Conflicting Transactions

• After the purchase, in 1925, Josefa Badelles built a new and larger house on the property, and the family continued to reside there until Josefa’s death in 1967.
• On April 30, 1954, a portion of Lot 433 was sold to Florencio Balatero through a “Deed of Sale of Unregistered Land,” resulting in the subdivision into Lot 433-A (98 square meters) and Lot 433-B (118 square meters).
• Despite these transactions, conflicting claims arose when, on June 9, 1930, a “Pacto de Retro Sale” was executed. This document transferred the property to private respondent Juan Veloso for a sum of P68.00, involving conditions for repurchase by the vendor (Josefa Iglupas).
• Notably, the property remained under the control of Josefa Iglupas and later her heirs—who consistently occupied and maintained the premises by paying taxes and performing acts of ownership.

Reservation of Part of the Land for Public Use

• Lot No. 817, a 34 square meter parcel, was earmarked by cadastral surveyors for the widening of a national road at its corner with San Miguel Street.
• Claimants, by admitting the subject land remained part of the public domain, acknowledged that the State reserved this lot for public use and could not be appropriated for private ownership.

Conflicting Claims and Procedural History

• Claimants involved included:
• Florencio Balatero and the heirs of Josefa Iglupas, asserting their right over Lots 433-A and 433-B based on purchase and continuous possession since 1918.
• Private respondent Juan Veloso, who based his claim on the 1930 “Pacto de Retro Sale,” asserting ownership over the entire Lot 433.
• Anacleto Iglupas, who contested the interpretation of the term “solar” in the 1918 sale document and argued that only the house (and not the lot) was conveyed to Josefa Iglupas.
• The trial court of Lanao del Norte, after considering various documents and evidence (including tax declarations, executed deeds, and mortgage agreements), ruled in favor of petitioners by adjudicating Lot 433-A to Florencio Balatero and Lot 433-B to the heirs of Josefa Iglupas, while declaring Lot No. 817 as part of the State’s public domain.
• The Intermediate Appellate Court reversed the lower court’s decision by awarding Lot 433 (both subdivisions) to Juan Veloso.
• Petitioners then filed a petition for review on certiorari challenging the appellate decision on several grounds including the mischaracterization of the “Pacto de Retro Sale.”

Issue:

Nature of the 1930 Contract

• Whether the “Pacto de Retro Sale” executed in 1930 constituted a bona fide contract of sale with right of repurchase or should be reinterpreted as an equitable mortgage based on the surrounding circumstances.

Adequacy of Consideration and Vendor’s Retention of Possession

• Whether the unusually inadequate price of P68.00—especially when compared to the 1918 sale price of P111.00—combined with the vendor’s continued possession and maintenance of the property, creates a presumption of an equitable mortgage under Article 1602 of the New Civil Code.
• Whether the fact that the vendor continued to occupy, pay taxes, and even mortgage the property post-contract indicates her true intention not to deliver it immediately as required by a sale.

Impact of Continuous and Uninterrupted Possession

• Whether the petitioners’ open, adverse, continuous, and peaceful possession of the property since 1918 (and especially from 1934 onwards) has bar Veloso’s claim to ownership by prescription.

Interpretation and Application of Article 1602

• Whether Article 1602 of the New Civil Code, though enacted after the execution of the contract, may be applied retroactively to safeguard the equitable mortgage character of the agreement.

Conflict Between Competing Claims

• Whether the conflicting claims of Anacleto Iglupas and Juan Veloso should be given effect over the documented and uninterrupted possession of Florencio Balatero and the heirs of Josefa Iglupas.

Authority to Reconvey and Inconsistencies in Veloso’s Position

• Whether the appellate court erred in allowing the reconveyance of property already in the name of petitioners and enabling private respondent Veloso to adopt inconsistent positions contrary to the doctrine of estoppel and principles of good faith.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)