Title
Avila vs. Spouses Barabat
Case
G.R. No. 141993
Decision Date
Mar 17, 2006
Heirs partitioned land; Avila sold her share to respondents, later claimed by another heir. Court upheld sale, ruling partition dissolved co-ownership, denying redemption rights.

Case Summary (G.R. No. 141993)

Petitioners’ position and factual background

The heirs built their respective houses on lot no. 348. In 1964 Benjamin Barabat leased a portion of the house owned by Narcisa Avila; Jovita Barabat moved in after their 1969 marriage. Avila moved to Cagayan de Oro City but returned in July 1979 intending to sell her house and her inherited share. A private document dated July 17, 1979, signed by Avila and offered in evidence by respondents, recites a sale by Avila of her house and share in the lot to the spouses Benjamin and Jovita Barabat for P8,000.00. After execution of the private document, respondents ceased paying rent, assumed possession as owners, and took over payment of the real property taxes.

Respondents’ position and procedural steps

Respondents relied on the July 17, 1979 private document (Exhibit “A”) to assert title and peaceful possession. When petitioners’ co-heir Januario Adlawan later claimed to be buying the property and respondents received notice of a sale by Avila to the Adlawans via counsel, respondents demanded a public deed from Avila. Upon her refusal, respondents filed a complaint for quieting of title in the Regional Trial Court (RTC) of Toledo City, later amending the complaint to include annulment of the deed to the Adlawans, specific performance, partition, and damages. The RTC rendered judgment in favor of respondents; the Court of Appeals affirmed in toto, and petitioners brought a petition for review under Rule 45.

Key dates and procedural history

Important dates include: 1964 (initial lease), 1969 (marriage of the Barabats), July 17, 1979 (private agreement), early 1982 (Adlawan claim), January 6, 1983 (notice from counsel for the Adlawans), May 9, 1995 (RTC decision), July 30, 1999 (Court of Appeals decision), January 19, 2000 (Court of Appeals resolution), and the Supreme Court decision disposing of the petition thereafter. The petition for review was prosecuted under Rule 45 of the Rules of Court.

Applicable law (constitutional and statutory basis)

Because the decision date lies after 1990, the 1987 Philippine Constitution is the constitutional framework applicable to the case. The substantive issues were adjudicated under provisions of the Civil Code cited by the courts: Articles 1602 and 1604 (equitable mortgage presumptions), Articles 1620 and 1623 (redemption or pre-emption by co-owners), and Article 1622 (pre-emption and redemption of adjoining owners). Procedural rules invoked included Rule 45 (petition for review) and references to Rules 129 and 132 of the Rules of Court regarding admissions and language/translation of documentary evidence. The courts also applied established doctrine on the binding character of trial court factual findings when affirmed by the Court of Appeals.

Trial court findings and Court of Appeals affirmation

The RTC found Exhibit “A” to be a valid and lawful deed of sale; it nullified the subsequent deed of sale to the Adlawans, ordered Avila to execute a formal notarized deed of sale in favor of respondents, and awarded moral damages and attorney’s fees against petitioners. The Court of Appeals affirmed the RTC’s decision in its entirety. Both tribunals concluded that the transaction evidenced by Exhibit “A” was an absolute sale and that Avila’s later assertions of an equitable mortgage or loan security were inconsistent with her conduct after the purported sale.

Standard for application of Articles 1602 and 1604 (equitable mortgage)

The courts correctly identified the two requisites for invocation of the equitable mortgage presumption under Articles 1602 and 1604: (1) the parties must have executed a contract denominated as a sale; and (2) the real intention of the parties must have been to secure an existing debt by way of mortgage. The lower courts determined that Exhibit “A” evidenced a sale and that the attendant circumstances (including Avila’s conduct after execution) demonstrated an intention to effect an absolute conveyance rather than to secure a debt.

Factual determinations supporting sale rather than equitable mortgage

The RTC and Court of Appeals found that respondents assumed possession as owners, stopped paying rent, and paid the real property taxes after execution of Exhibit “A.” Those post-contract acts were taken as consistent with an absolute transfer of ownership. Petitioners’ contention that the document was a security for an P8,000.00 loan and thus an equitable mortgage was rejected in light of the courts’ factual findings. The Supreme Court declined to disturb these findings, noting the established rule that trial court findings, when adopted and affirmed by the Court of Appeals, are binding and conclusive on the Supreme Court absent compelling reason to depart.

Inadequacy of price allegation

Petitioners alleged gross inadequacy of consideration to support a presumption of equitable mortgage, but they failed to introduce evidence establishing the fair market value of the property at the time of the 1979 transaction. The absence of proof of the land’s fair market value prevented a finding that the P8,000.00 price was grossly inadequate; therefore, the equitable-mortgage presumption could not be grounded on alleged inadequacy.

Right of redemption and co-ownership status

Petitioners relied on Articles 1620 and 1623 to assert a right of redemption as co-owners. The courts held that legal redemption by a co-owner presupposes the existence of co-ownership at the time the conveyance was made. Here, petitioners admitted in pleadings that they had erected and occupied distinct houses on the lot and that their respective shares had been physically segregated, which the courts treated as an effective partition. Because the shares were already physically determined and petitioners had taken possession of their respective portions before the 1979 conveyance, co-ownership had been extinguished and the statutory right of redemption among co-owners no longer existed.

On judicial admission, partition, and extinguishment of co-ownership

Petitioners’ affirmative defense stating that they had “their own respective buildings constructed on the said lot” was treated as an express judicial admission; absent pal

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