Title
Singson vs. Spouses Carpio
Case
G.R. No. 238714
Decision Date
Aug 30, 2023
Respondents claimed ownership of a property acquired from Primitiva, but petitioner argued it was an equitable mortgage. SC ruled the transfer void due to pactum commissorium, reinstating the property to Primitiva’s name.
property dispute
transfer of ownership
void
A

Case Summary (G.R. No. 238714)

Procedural Posture

Respondents filed a Complaint for Recovery of Possession and Ownership of Real Property with Damages before the RTC of Manila (Civil Case No. 10‑124055). The RTC rendered judgment in favor of respondents. The Court of Appeals affirmed the RTC decision. Petitioner filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court to the Supreme Court, which granted relief by reversing the CA and RTC decisions, dismissed respondents’ complaint, cancelled TCT No. 286305, and ordered reinstatement of TCT No. 267017 in the name of Primitiva Cayanan Caamic, subject to respondents’ equitable mortgage rights.

Material Facts

Primitiva Cayanan Vda. De Caamic (Primitiva) purportedly entered into a document titled "Bilihan ng Lupa" dated February 18, 2007, by which she conveyed the subject property for P135,000 with a right to repurchase within five years for P135,000 plus 3% monthly interest (amounting to P387,000 over five years). Primitiva and petitioner continued to occupy the property pursuant to that instrument. Other instruments (a "Kasunduan" dated February 16, 2007 for P450,000 and a Deed of Sale dated February 18, 2007 for P70,000) were introduced in the record but were not formally offered or were denounced as forged; the notary public who notarized the Bilihan ng Lupa certified the Deed of Sale was not notarized by him. Respondents succeeded in registering the property in their names as TCT No. 286305; respondents presented that title and tax receipts as evidence of ownership. Primitiva died on July 21, 2007. Petitioner and a purported heir, Enriquito, occupied the property but Enriquito was later dropped as defendant after vacating.

Claims and Relief Sought

Respondents sought a declaration of ownership and recovery of possession based on their Torrens certificate (TCT No. 286305), monthly rentals from July 2007, moral damages (P50,000), exemplary damages (P50,000), attorney’s fees (P30,000), and costs. Petitioner denied ownership, asserted the Bilihan ng Lupa was an equitable mortgage (security for a P135,000 loan), alleged fraudulent transfer/registration by respondents, and sought dismissal of the complaint. Petitioner also raised forgery complaints against respondents concerning certain instruments.

RTC Ruling

The RTC found the Bilihan ng Lupa to be a contract of sale with conventional redemption and held respondents were valid owners, ordering petitioner to vacate and pay monthly rent and attorney’s fees. The RTC reasoned that conventional redemption applied under Articles 1601 and 1616 and that the right to repurchase ceased on Primitiva’s death, thereby barring petitioner and Enriquito from redeeming after July 2007.

Court of Appeals Ruling

The CA reversed the RTC’s characterization of the Bilihan ng Lupa and held it was an equitable mortgage. Nevertheless, the CA affirmed judgment for respondents on the ground that upon Primitiva’s death she had no known heirs entitled to redeem, and petitioner lacked legal personality as heir or assign to insist on equitable mortgage rights. The CA therefore sustained respondents’ ownership and possession.

Issue Presented to the Supreme Court

Whether the CA gravely erred in affirming the RTC despite proof that the Bilihan ng Lupa is in the nature of a pactum commissorium (i.e., whether respondents impermissibly appropriated ownership of a mortgaged property without foreclosure, thereby violating Article 2088 and the prohibition on pactum commissorium).

Burden and Standard of Proof Applied

The Supreme Court reiterated established civil standards: the plaintiff bears the burden of proof throughout; proof is by preponderance in civil cases; and a party asserting affirmative matters must sustain them. The Court recognized that respondents’ documentary evidence (TCT, tax declarations, receipts) established a prima facie case, but petitioner successfully controverted that case by formally offering the Bilihan ng Lupa and the notary’s certification that another Deed of Sale was forged, thereby shifting the burden back to respondents to explain how they validly acquired ownership.

Characterization: Equitable Mortgage vs Sale with Conventional Redemption

Applying Article 1602 and jurisprudence, the Court agreed with the CA that the Bilihan ng Lupa is an equitable mortgage rather than a sale with conventional redemption. The Court relied on factors listed in Article 1602 — notably that the vendor remained in possession and the transaction’s purpose was to secure a debt — and on the legal principle that a deed of sale with pacto de retro which is in truth security for a loan should be treated as an equitable mortgage. Thus, the true intent of the parties controlled over the label of the instrument.

Pactum Commissorium and Foreclosure Requirement

The Court emphasized Article 2088: a creditor cannot appropriate mortgaged property by mere default of the debtor; any stipulation to the contrary is null and void. For an equitable mortgagee to obtain ownership, the proper remedy is foreclosure and purchase at a public auction. Because respondents failed to present evidence that they foreclosed the equitable mortgage and acquired the property via public auction, the Court found their registration and acquisition amounted to the prohibited practice of pactum commissorium, void as contrary to law and public policy. The Court concluded the transfer and TCT in respondents’ names must be cancelled.

Torrens Title, Reivindicatory Suit, and Collateral Attack Principle

The Court rejected respondents’ contention that petitioner’s defense was a collateral attack on a Torrens title. In a reivindicatory action where ownership is directly contested, the trial court has jurisdiction to pass upon the validity of a certificate of title. The Court recalled jurisprudence establishing that a Torrens certificate is not conclusive proof of ownership against the true owner and cannot be a shield to perpetrate fraud. Because petitioner challenged the validity of respondents’ acquisition and offered the Bilihan ng Lupa as evidence that the transaction was in reality an equitable mortgage, the title’s indefeasibility did not preclude judicial inquiry into how respondents acquired ownership.

Evidentiary Findings and Allocation of Proof

The Court found respondents’ evidence insufficient to prove they acquired ownership lawfully: they did not deny or explain the Bilihan ng Lupa’s authenticity, did not present evidence of foreclosure and auction purchase, and relied primarily on their Torrens title and tax documents which, in absence of proof of possession or foreclosure, were inadequate to establish ownership when countervailing evidence existed. Conversely, petitioner formally offered the Bilihan ng Lupa and the notary’s certification denouncing the Deed of Sale as forgery; respondents failed to controvert these submissions.

Remedies and Final Disposition

The Supreme Court granted the petition: it dismissed respondents’ Complaint for Recovery of Possession and Ownership for lack of merit; declared TCT No. 286305 in respondents’ names void and cancelled; ordered the Regi

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