G.R. No. 179205 , July 30, 2014
HEIRS OF REYNALDO DELA ROSA, namely: TEOFISTA DELA ROSA, JOSEPHINE SANTIAGO AND JOSEPH DELA ROSA, Petitioners, vs. MARIO A. BATONGBACAL, IRENEO BATONGBACAL, JOCELYN BATONGBACAL, NESTOR BATONGBACAL AND LOURDES BATONGBACAL, Respondents.

FACTS

The subject property is a 3,750-square-meter portion of a 15,001-square-meter parcel of land in Barrio Saog, Marilao, Bulacan, registered under TCT No. T-107449 under the names of Reynaldo Dela Rosa, Eduardo Dela Rosa, Araceli Dela Rosa, and Zenaida Dela Rosa. In 1984, Reynaldo offered to sell the subject property to Guillermo Batongbacal and Mario Batongbacal for ₱50.00 per square meter, totaling ₱187,500.00. Reynaldo received an advance payment of ₱31,500.00, leaving a balance of ₱156,000.00. A document titled “Resibo,” signed by Reynaldo on February 18, 1987, outlined the agreement, stating that ₱20,000.00 of the advance would be paid upon delivery of a Special Power of Attorney (SPA) authorizing Reynaldo to alienate the property on behalf of his co-owners, with the balance payable in monthly installments of ₱10,000.00. Mario and Guillermo initiated a survey to segregate the 3,750-square-meter portion and demanded the SPA, but Reynaldo failed to deliver it. Subsequently, Guillermo and Mario filed a complaint for Specific Performance or Rescission and Damages (Civil Case No. 215-M-90) before the RTC of Malolos, Bulacan, seeking enforcement of the Contract to Sell. They also filed a Notice of Lis Pendens. Reynaldo countered that the contract was void, claiming it was an equitable mortgage for a loan of ₱31,500.00. The RTC dismissed the complaint, ruling the Contract to Sell unenforceable under Article 1403 of the Civil Code due to Reynaldo’s lack of authority to bind his co-owners without an SPA, but ordered Reynaldo to return ₱28,000.00 with 12% annual interest. On appeal, the Court of Appeals initially affirmed but modified the RTC decision, rescinding the contract and ordering Reynaldo to return ₱31,500.00 with interest and pay damages. Upon respondents’ motion for reconsideration, the Court of Appeals issued a Resolution directing Reynaldo to execute a Deed of Sale over his undivided share in the property. Reynaldo died during the proceedings, and his heirs were substituted as petitioners.

ISSUE

Whether the contract entered into by the parties was a Contract to Sell or an equitable mortgage.

RULING

The Supreme Court denied the petition and affirmed the assailed Decision and Resolution of the Court of Appeals. The Court held that the contract was a Contract to Sell, not an equitable mortgage. Petitioners failed to prove that the parties intended the property as security for a debt. The terms of the “Resibo” were clear and unambiguous, indicating a sale. The Court emphasized that the literal meaning of stipulations controls when the contract’s terms are clear. The gross inadequacy of price claimed by petitioners was insufficient to establish an equitable mortgage, as the contract’s intent was evident from its language. The Court of Appeals correctly ruled that the sale of Reynaldo’s undivided share was valid and enforceable, and Reynaldo could be compelled to execute the Deed of Sale. The Supreme Court declined to delve into factual issues, consistent with its role as not a trier of facts.