Case Summary (G.R. No. 149756)
Facts
On February 21, 1991, the Ramos spouses executed a “Deed of Sale Under Pacto de Retro” in favor of Sarao for ₱1,310,430, with an option to repurchase within six months by paying the principal plus 4.5% monthly interest. The spouses retained possession throughout. In May–July 1991, Myrna Ramos sought computations of the outstanding obligation, receiving figures ranging from ₱1.56 million to ₱2.91 million. On July 30, 1991, she tendered two manager’s checks totaling ₱1,633,034.20, which Sarao refused as insufficient. On August 8, 1991, Myrna filed a redemption complaint (Civil Case No. 91-2188), and on August 13 she consigned the same amount with the court. On December 21, 1991, Sarao filed separate consolidation proceedings (Civil Case No. 91-3434). Both actions were consolidated and tried together.
Procedural History
• RTC (Branch 145, Makati City) dismissed Ramos’s complaint and granted Sarao’s petition to consolidate title in her name.
• CA (CA-GR CV No. 50095) affirmed the RTC decision on August 31, 2001, ruling the contract a bona fide pacto de retro and finding Ramos’s tender and consignation invalid.
• Petition for Review under Rule 45 was filed with the Supreme Court.
Issues
- Whether the so-called pacto de retro was in reality an equitable mortgage.
- Whether Ramos’s tender of ₱1,633,034.20 and subsequent consignation were valid.
- Whether Ramos is entitled to moral damages and attorney’s fees.
Analysis
Nature of the Contract: The Supreme Court emphasized that substance prevails over form. Under Civil Code Article 1602, equitable mortgage is presumed when, among other factors, the vendor remains in possession and the sale price is grossly inadequate. Here, the spouses continued to reside on the property, obtained the deed to secure a loan to avert foreclosure, and all communications treated the transaction as a loan obligation rather than a genuine sale. Sarao failed to rebut the presumption with clear and convincing evidence of an actual sale. The contract is therefore an equitable mortgage.
Validity of Tender and Consignation: Tender of payment consists in offering the proper amount due. Ramos relied on Sarao’s own computation (₱1,633,034.20) and gave notice that failure to accept would lead to consignation. Sarao’s subsequent demand for ₱2.9 million included unauthorized expenses. The refusal to accept the legitimate tender was without just cause. Ramos properly consigned the amount with the court and notified Sarao, satisfying Articles 1256–1258. Consignation operated retroactively to extinguish the obligation.
Moral Damages and Attorney’s Fees: Ramos’s bare allegations of anxiety and potential homelessness did not fit the statutory bases for moral damages under Article 2219, nor was there a contractual or statutory ground for attorney’s fees under Article 2208. Awards
Case Syllabus (G.R. No. 149756)
Facts
- On February 21, 1991, Spouses Jonas and Myrna Ramos executed a “Deed of Sale under Pacto de Retro” over their conjugal house and lot in Makati City in favor of Susana S. Sarao for ₱1,310,430.00.
- The contract granted the Ramos spouses a six-month option to repurchase the property for the same principal sum plus 4.5% interest compounded monthly. Failure to pay interest or repurchase within the period would vest absolute title in Sarao.
- Petitioner Myrna Ramos testified that the real purpose was a loan accommodation: she and her husband borrowed ₱1,234,000.00 to pay an existing bank mortgage, added ₱20,000.00 attorney’s fees, and paid advance interest. The market value of the property was around ₱10 million, but it was offered at the low amount to secure only a loan.
- Myrna wrote in May 1991 requesting a computation of the loan obligation; Sarao’s lawyer, Atty. Aguinaldo, did not reply in writing, but on July 23, 1991 furnished a handwritten computation showing an obligation of ₱2,911,579.22.
- On July 30, 1991, Myrna tendered two manager’s checks totaling ₱1,633,034.20 based on Sarao’s earlier computations; Sarao refused them as insufficient.
- On August 8, 1991, Myrna filed a Complaint for redemption, moral damages, and attorney’s fees (Civil Case No. 91-2188, RTC Branch 145). On December 21, 1991, Sarao filed a Petition for consolidation of ownership in pacto de retro (Civil Case No. 91-3434, Branch 61). The two cases were consolidated and tried together.
Procedural History
- RTC Branch 145, Makati City dismissed Myrna Ramos’s complaint for redemption and granted Sarao’s consolida