aliniel uy

Pedro Molina, Petitioner-Appellant

Vs.

Hon. Court of Appeals and Spouses Margarito M. Flores and Nerisa Herrera

Facts:

            Petitioner Molina entered into an agreement with his sister Felisa Molina to convey his sister his share in their co-owned real property by way of a Deed of Absolute Sale which was however was not registered.  For almost 6 years after, petitioner filed an action for reformation of instrument and/or annulment of document and title with reconveyance and damages before the RTC alleging that the Deed in favor of the respondent spouses does not express the true will and intention of the parties. RTC ordered annulment of the Deed which was reversed by the Court of Appeals hence the petition.

Issue: 

            Whether the parties intended the Deed of Absolute Sale in favor of the respondents to be an equitable mortgage?

Held:

           

            An equitable mortgage is defined as one which, although lacking in some formality, or form or words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real property as security for a debt, and contains nothing impossible or contrary to law.

The intention of the parties to an agreement is shown not necessarily by the terminology used therein but by all the surrounding circumstances, such as the relative situation of the parties at the time, the attitude, acts, conduct, declarations of the parties, the negotiations between them leading to the deed, and generally, all pertinent facts having a tendency to fix and determine the real nature of their design and understanding. For the presumption of an equitable mortgage to arise under Art. 1602, two (2) requisites must concur: (a) that the parties entered into a contract denominated as a contract of sale, and (b) that their intention was to secure an existing debt by way of a mortgage.  In the case at bar second requisite is conspicuously absent.

The receipt of P 1,000.00 as instalment indicates that the transaction was not one of a loan but of sale on installments. The alleged inadequacy of the price harped upon by petitioner does not itself support the conclusion that the property was not at all sold or that the contract was one of a loan.

Petitioner also argues that assuming it was a contract of sale that was entered into, it was not consummated as the entire price was not paid, the receipt of the petitioner of only P8,000.00 as acknowledged by him does not bar the transfer of ownership or possession of the property, much less dissolve the contract of sale. The injured party may choose between the fulfillment and the rescission of the obligation, with payment of damages in either case.  He may also seek rescission, even if after he has chosen fulfillment, if the latter should become impossible.

Vicente Ong Lim Sing Jr, Petitioner

Vs.

FEB Leasing & Finance Corporation, Respondent

Facts:

            FEB Leasing entered into a lease of equipment and motor vehicles with JVL Food Products.  Petitioner Lim Sing executed an individual Guaranty Agreement with FEB to guarantee the prompt and faithful performance of the terms and conditions of the aforesaid lease agreement. Failure of JVL to pay rentals, FEB filed a complaint against JVL and the petitioner.  In its answer, petitioner admitted the existence of the lease agreement but asserted that it is in reality a sale of equipment on installment basis, with FEB acting as the financier.

Issue:

            Whether the agreement entered into was a lease or sale on installment?

Held:

            The validity of Lease No. 27:95:20 between FEB and JVL was upheld.  JVL entered into the lease contract with full knowledge of its terms and conditions.  The contract was in force for more than four years and petitioner never questioned its provisions.  They only attacked its validity after they were judicially made to answer for their default in the payment of the agreed rentals.

            It is settled that the parties are free to agree to such stipulations, clauses, terms, and conditions as they want to include in a contract.  As long as such agreements are not contrary to law, morals, good customs, public policy or public order, they shall have the force of law between the parties.  Contracting parties may stipulate on terms and conditions as they may see fit and these have the force of law between them.