G.R. No. 171904 & G.R. No. 172017; August 7, 2013
Case Parties/Title: BOBBY TAN, PETITIONER, vs. GRACE ANDRADE, PROCESO ANDRADE, JR., CHARITY A. SANTIAGO, HENRY ANDRADE, ANDREW ANDRADE, JASMIN BLAZA, GLORY ANDRADE, MIRIAM ROSE ANDRADE, AND JOSEPH ANDRADE, RESPONDENTS. (Consolidated with G.R. No. 172017: GRACE ANDRADE, et al., PETITIONERS, vs. BOBBY TAN, RESPONDENT.)

FACTS

Rosario Vda. De Andrade was the registered owner of four parcels of land. She mortgaged them to Simon Diu, who foreclosed. Before the redemption period expired, Rosario sought Bobby Tan’s assistance, and he agreed to redeem the properties. Subsequently, Rosario sold the properties to Bobby Tan and her son, Proceso Andrade, Jr., for ₱100,000.00 through a Deed of Absolute Sale dated April 29, 1983. On July 26, 1983, Proceso, Jr. executed a Deed of Assignment ceding his rights and interests to Bobby Tan for ₱50,000.00. Bobby Tan then extended an Option to Buy to Proceso, Jr., giving him until July 31, 1984 to repurchase the properties for ₱310,000.00. Proceso, Jr. failed to exercise the option. Bobby Tan consolidated ownership, and titles were issued in his name.
On October 7, 1997, Rosario’s children (collectively, the Andrades) filed a complaint for reconveyance and annulment of deeds and damages against Bobby Tan. They alleged the transaction was an equitable mortgage to secure Rosario’s debt, not a sale. They also claimed the properties were conjugal, inherited from their father, Proceso Andrade, Sr., and thus Rosario could not dispose of their shares. Bobby Tan defended that the properties were Rosario’s exclusive property, the sale was valid, and the defenses of prescription and laches applied.
The Regional Trial Court (RTC) dismissed the complaint, ruling the transaction was a bona fide sale, the properties appeared to be Rosario’s exclusive property, and the claims were barred by prescription and laches. The Court of Appeals (CA) affirmed in part. It agreed the transaction was a sale, not an equitable mortgage. However, it ruled the properties were conjugal property of Rosario and Proceso, Sr., thus co-owned by Rosario and her children. The sale was valid only as to Rosario’s pro-indiviso share. A resulting trust was created for the children’s shares, so prescription/laches did not bar their action. The CA ordered Bobby Tan to reconvey the Andrades’ share. Both parties filed motions for reconsideration, which were denied, leading to the consolidated petitions.

ISSUE

1. Whether the transaction between Rosario and Bobby Tan was a contract of sale or an equitable mortgage.
2. Whether the subject properties were the exclusive property of Rosario or conjugal property of Rosario and her late husband, Proceso Andrade, Sr.

RULING

1. On the Nature of the Transaction: The Supreme Court upheld the findings of the RTC and CA that the transaction was a bona fide contract of sale, not an equitable mortgage. The Court emphasized that factual findings of the CA, especially when affirming the RTC, are generally conclusive and binding. No clear and convincing evidence was presented to prove the parties agreed to a mortgage. Therefore, the Andrades’ petition (G.R. No. 172017) on this issue was denied.
2. On the Nature of the Properties: The Supreme Court reversed the CA and reinstated the RTC’s finding that the properties were the exclusive property of Rosario. The Court applied Article 160 of the Civil Code, which presumes property acquired during marriage to be conjugal. However, for this presumption to apply, the party invoking it must first prove the property was acquired during the marriage. The Andrades failed to present evidence showing when the properties were acquired. Testimony indicated Rosario inherited the properties from her parents. The Torrens titles were in Rosario’s name alone. The burden to prove conjugality was on the Andrades, and they did not discharge it. Therefore, the presumption of conjugality did not operate. Consequently, Rosario had the full right to sell the properties, and Bobby Tan validly acquired full ownership. The order for reconveyance was set aside.
Dispositive: Bobby Tan’s petition (G.R. No. 171904) was GRANTED. The CA Decision and Resolution were REVERSED and SET ASIDE. The RTC Judgment dismissing the complaint was REINSTATED. The Andrades’ petition (G.R. No. 172017) was DENIED.