GR 48696; (November, 1942) (Digest)
G.R. No. 48696 , November 28, 1942
FELIZA ZUBIRI, petitioner, vs. LUCIO QUIJANO, respondent.
FACTS
The petitioner, Feliza Zubiri, appealed from a decision of the Court of Appeals. The Court of Appeals held that a contract dated May 15, 1934, which purported to be a two-year pacto de retro sale of three parcels of land from Zubiri to the respondent, Lucio Quijano, was actually an equitable mortgage. The Court of Appeals sentenced Zubiri to pay Quijano the alleged purchase price of P700, with legal interest from the date of the filing of the complaint (November 15, 1937). It further ordered that, in default of payment, the land be sold at public auction to satisfy the judgment.
ISSUE
1. Whether the Court of Appeals erred in ordering the sale of the land in case of non-payment, given that the contract was not registered under the Land Registration Act and thus could not operate as a mortgage to justify foreclosure.
2. Whether the Court of Appeals erred in not finding that Zubiri had paid usurious interest to Quijano.
RULING
1. On the first issue: The Supreme Court held that the Court of Appeals did not err. The contract, though an unrecorded pacto de retro sale, was construed as an equitable mortgage. The lien created by such an equitable mortgage should not be defeated by the lack of formal registration required for a voluntary real estate mortgage, as long as the land remained in the hands of the petitioner and the rights of innocent third parties were not affected. The Court cited Correa vs. Mateo and Icasiano (55 Phil., 79), where an unrecorded pacto de retro sale was similarly construed as an equitable mortgage, and foreclosure was allowed.
2. On the second issue: The Supreme Court held that the Court of Appeals’ conclusions rejecting the claim of usurious interest were findings of fact. Since the Supreme Court is not authorized to re-examine the evidence on appeal, these factual conclusions must be accepted.
Modification and Disposition: The Supreme Court affirmed the decision of the Court of Appeals but, in the exercise of its equity jurisdiction and considering that the complaint did not originally seek debt recovery, Zubiri obtained a favorable judgment in the Court of First Instance, and the Court of Appeals decision was by a narrow vote (32), modified the judgment. The petitioner was sentenced to pay interest only from the date the Supreme Court’s decision becomes final. The appealed decision was affirmed as modified, with costs against the petitioner.