Case Summary (G.R. No. 219638)
Antecedent Facts
The Repuela brothers inherited Lot No. 3357 located in Lawaan III, Talisay City, Cebu, after their parents' passing. In July 1963, they approached the Spouses Larawan for a loan of P200, presenting the property title as security. They alleged that they signed a mortgage contract under duress, believing their title would only secure the loan. However, documentation revealed that the Larawans used their signatures to transfer the title, leading the Repuela brothers to file for annulment in 2003 when they discovered the ownership transfer.
Ruling of the Regional Trial Court (RTC)
The RTC ruled in favor of the Repuela brothers, declaring the transaction an equitable mortgage rather than a sale, citing their ongoing possession and continued payment of property taxes as indicators of their original ownership intent. The court emphasized the Repuela brothers' lack of understanding due to their limited education and illiteracy, as well as witness testimony corroborating their claims of continued cultivation of the property.
Ruling of the Court of Appeals (CA)
The CA reversed the RTC's ruling on the grounds that there was insufficient proof to contest the legitimacy of the documentation supporting the Larawans' ownership. The CA found that the petitioners failed to demonstrate continued possession or that their intention was merely to secure a loan instead of selling the property. The CA deemed the petitioners’ claim barred by laches, as 39 years had passed since the alleged transaction.
Legal Issues
The primary legal issue revolves around the classification of the Extrajudicial Declaration of Heirs and Sale—whether it constituted an equitable mortgage. The Repuela brothers claimed that ongoing possession, along with the conditions under which they surrendered their title to the Larawans, indicated their intention to create a security agreement rather than executing a sale.
Court's Analysis
The Supreme Court found merit in the petitioners' claims, holding that the Repuela brothers' intention was to secure their loan and not to divest themselves of ownership. The Court reiterated that possession following a sale can lead to an inference of the existence of an equitable mortgage under Article 1602 of the Civil Code. The factors c
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Case Overview
- Case Citation: G.R. No. 219638, December 07, 2016
- Court: Supreme Court of the Philippines
- Division: Second Division
- Decision by: Justice Mendoza
- Core Issue: Determination of whether the "Extrajudicial Declaration of Heirs and Sale" constituted an equitable mortgage rather than a sale.
Antecedents of the Case
- The Repuela brothers, Marcelino and Cipriano, inherited Lot No. 3357 in Talisay City, Cebu after the death of their parents, Lorenzo and Magdalena Repuela.
- In July 1963, they borrowed P200.00 from Otillo Larawan, providing the certificate of title as collateral, believed to be in the form of a mortgage.
- The brothers signed a document, which they later claimed was a blank contract, without understanding its implications.
- Over the years, they continued to possess the property, cultivating it and paying taxes, unaware that the title had been transferred to the Larawans.
Legal Proceedings
- Initial Complaint: Filed in 2003 by the Repuela brothers seeking annulment of the "Extrajudicial Declaration of Heirs and Sale" and cancellation of the new title issued to the Larawans.
- RTC Decision (February 23, 2011): Ruled in favor of the Repuela brothers, declaring the transaction an equitable mortgage, allowing them to redeem the property.
- Appeal by Larawans: The Estate of Spouses Larawan appealed to the Court of Appeals (CA), which reversed the RTC's decision.
Ruling of the Court of Appeals
- Date of Decision: May 29, 2014
- Key Findings:
- The Repuela brothers fai