Case Summary (G.R. No. 144712)
Initial Petition and Pleadings
Ramos alleged that the Pascuals executed a Deed of Absolute Sale with Right to Repurchase for ₱150,000, annotated on TCT No. 305626, with a one-year repurchase period that lapsed. He sought consolidation of title. The Pascuals admitted signing but claimed the instrument was a mortgage, not a sale, with no time limit for repurchase, and asserted overpayment. They also raised defenses of lack of jurisdiction, lack of capacity, prescription, failure to state a cause of action, extinguishment of obligation, and non-compliance with barangay conciliation. Their counterclaim sought cancellation of the annotation, return of overpayments, and damages including attorney’s fees.
Trial Court’s Determination of Equitable Mortgage
After pre-trial, the RTC identified four issues: nature of the deed (sale vs. mortgage); payment or overpayment; entitlement to title consolidation; and damages. Trial evidence included a Sinumpaang Salaysay stating a ₱150,000 loan secured by collateral sale with repurchase right, bearing 7% monthly interest, and receipts of payments by the Pascuals. The court concluded the deed was an equitable mortgage, found total payments of ₱344,000, and, applying 7% per annum interest, awarded the Pascuals ₱141,500 overpayment, canceled the annotation, and granted fees and costs.
Revised Computation and Reduction of Interest Rate
Ramos moved to correct the interest rate to 7% per month. The court, noting the parties’ stipulation but deeming 7% per month onerous, invoked Civil Code Article 24 and unilaterally reduced the rate to 5% per month. It recalculated interest from June 3, 1987 to April 3, 1995 at ₱705,000, deducted payments of ₱344,000, and ordered the Pascuals to pay ₱511,000 plus fees and costs. The Pascuals’ motion to reconsider challenged notice, asserted overpayment, and argued both 5% and 7% rates were usurious; Ramos defended the agreed rate, reliance on the moratorium on the Usury Law, and absence of fraud. The RTC denied reconsideration.
Court of Appeals’ Affirmation
On appeal, the Pascuals contended Ramos’ petition sought only title consolidation, not recovery of loan balance; the CA held that under Rule 10, Section 5, issues tried by consent—including the unpaid balance—were deemed pleaded. It found the unchallenged stipulation of 7% monthly interest and the receipts supported a balance even at 5% per month, and it affirmed both RTC orders in toto.
Supreme Court’s Analysis on Issue Presentation
The Supreme Court observed that the Pascuals shifted theories throughout the proceedings and never timely contested the validity of the stipulated interest rate in their answer or pre-trial brief. It emphasized that issues raised only in a motion for reconsideration of the CA deci
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Facts of the Case
- On June 3, 1987, Spouses Silvestre and Celia Pascual executed a document styled “Deed of Absolute Sale with Right to Repurchase” over two parcels of land (TCT No. 305626) in Bambang, Bulacan, for ₱150,000, annotated on the title.
- Simultaneously, the parties signed a notarization-free “Sinumpaang Salaysay” stating the transaction was in reality a ₱150,000 loan secured by the property, with 7% interest per month, a one-year repurchase period (until June 3, 1988), and conditions for foreclosure only after six consecutive months’ nonpayment of interest.
- The Salaysay further contained a waiver by the Pascuals of any claim for surplus upon foreclosure or any future complaint.
Procedural Posture
- July 5, 1993: Respondent Rodrigo V. Ramos filed a petition for consolidation of title in RTC Malolos, Bulacan (Civil Case No. 526-M-93), praying that ownership be consolidated in his favor due to the Pascuals’ failure to repurchase.
- The Pascuals admitted the ₱150,000 consideration but characterized the transaction as a real estate mortgage, denied any one-year limitation, claimed overpayment, and asserted multiple defenses (lack of jurisdiction, lack of capacity, prescription, failure to state a cause of action, extinguishment by payment/waiver, and lack of barangay conciliation).
- The Pascuals counterclaimed for cancellation of the annotated sale, release of the mortgage, return of overpayment, and awarded damages and fees.
Pre-Trial Issues
- Nature of the Deed: absolute sale with right to repurchase or a mere mortgage.
- Whether the Pascuals had paid or overpaid the principal obligation.
- Whether title consolidation in favor of Ramos was proper.
- Whether damages and fees were awardable.
Trial Court Decision (March 15, 1995)
- The RTC found the transaction to be a ₱150,000 loan secured by a real estate mortgage.
- It credited the Pascuals with total payments of ₱344,000 and, applying 7% per annum, held they had overpaid by ₱141,500.
- It dismissed Ramos’s petition, ordered annotation cancellation on TCT No. 305626, awarded the Pascuals ₱141,500 plus ₱15,000 attorney’s fees and ₱3,000 litigation expenses, with costs against Ramos.