G.R. No. 128677 ; March 2, 2000
SANTIAGO ABAPO (substituted by NATIVIDAD ABAPO-ALMARIO), petitioner, vs. HONORABLE COURT OF APPEALS and HEIRS OF SPOUSES PEDRO BACALSO AND CRISPULA ABAPO-BACALSO, respondents.

FACTS

The dispute involves Lot 3912, originally owned by spouses Victoriano Abapo and Placida Mabalate. Their children, Santiago Abapo and Crispula Abapo-Bacalso, along with their respective heirs, are the contending parties. In 1967, Santiago and Crispula executed a “Deed of Sale Under Pacto de Retro” over the lot in favor of their tenant, Teodulfo Quimada, for P500.00, with a five-year repurchase period. No redemption was made. In 1975, Quimada executed a “Deed of Absolute Sale” over the same property in favor of Crispula and her husband, Pedro Bacalso, for the same amount. The Bacalso spouses thereafter possessed the land, enjoyed its fruits, and paid realty taxes until their deaths, succeeded by their heirs (private respondents).
In 1990, Santiago Abapo successfully petitioned for the reconstitution of the original certificate of title, obtaining the owner’s copy. Upon discovering this, the heirs of Bacalso filed an action for quieting of title, arguing that Santiago’s claim and possession of the title created a cloud on their ownership. Santiago contested the validity of both the 1967 and 1975 deeds, claiming the pacto de retro sale was actually an equitable mortgage and that he never sold his interest. The trial court ruled in favor of the Bacalso heirs, a decision affirmed by the Court of Appeals.

ISSUE

The core issue is whether the 1967 Deed of Sale Under Pacto de Retro was a true sale with right to repurchase or an equitable mortgage, and consequently, whether the Bacalso heirs have acquired absolute ownership of the disputed property.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ decisions. The Court upheld the factual findings that the 1967 contract was a genuine pacto de retro sale, not an equitable mortgage. Petitioner’s argument that the P500.00 price was “unusually inadequate” to indicate a sale was rejected. The Court noted the trial court’s finding that the assessed value of the property at the time was only P170.00, making the consideration not grossly inadequate. None of the circumstances enumerated in Article 1602 of the Civil Code that give rise to a presumption of an equitable mortgage were present. The vendor did not remain in possession; the Bacalso spouses and their successors took possession, paid taxes, and enjoyed the fruits exclusively after the 1975 sale from Quimada. The Court emphasized it is not a trier of facts and found no reason to disturb the concurrent factual conclusions of the trial and appellate courts, which were supported by evidence. Since the pacto de retro sale was not redeemed, ownership was consolidated with Quimada, who validly conveyed it to the Bacalso spouses. Thus, the Bacalso heirs are the absolute owners, and Santiago’s reconstituted title correctly constitutes a cloud on their title which must be removed.