B2022 REPORTS ANNOTATED
Tan v Valdehueza
I. Recit-ready summary
A parcel of land was subjected to a public auction and Lucia Tan, plaintiff
was the highest bidder for the land. An absolute deed of sale was executed
in favor of Lucia Tan.
Arador Valdehueza and Rediculo Valdehueza have executed two
documents of deed of pacto retro sale in favor of the Lucia Tan. Arador
Valdehueza and Rediculo Valdehueza remained in the possession of the
land; that land taxes to the said land were paid by them. A complaint for
injunction was filed by Tan on July 24, 1957 against the Valdehuezas, to
enjoin them "from entering the above described parcel of land…”
RTC rendered judgment in favor of the plaintiff where the Valdehueza’s
were ordered to pay legal interest among others. Issue is w/n the
Valdehuezas are required to pay the legal interest. The Court ruled in the
negative as the imposition of legal interest on the amounts subject of the
equitable mortgages, are without legal basis. “No interest shall be due
unless it has been expressly stipulated in writing
II. Facts of the case
A parcel of land was subjected to a public auction and Lucia Tan,
plaintiff was the highest bidder for the land. An absolute deed of sale was
executed in favor of Lucia Tan.
Arador Valdehueza and Rediculo Valdehueza have executed two
documents of deed of pacto retro sale in favor of the Lucia Tan. Arador
Valdehueza and Rediculo Valdehueza remained in the possession of the
land; that land taxes to the said land were paid by them.
A complaint for injunction was filed by Tan on July 24, 1957 against
the Valdehuezas, to enjoin them "from entering the above described parcel
of land…” The Deed of Pacto de Retro dated August 5, 1955 was not
registered in the Registry of Deeds, while the Deed of Pacto de Retro dated
March 15, 1955 was registered.
RTC rendered judgment in favor of the plaintiff where the
Valdehueza’s were ordered to pay legal interest among others.
G.R. NO:
ARTICLE; TOPIC OF CASE:
VOL 32 [August 6, 1975]
Tan v Valdehueza
III. Issue/s
1. W/N the transactions between the parties were simple loan or
should it be declared as equitable mortgage? No, it should be
declared as equitable mortgage
2. W/N the Valdehueza’s are to pay the legal interest? No
IV. Ratio/Legal Basis
1. Under article 1875 of the Civil Code of 1889, registration was a
necessary requisite for the validity of a mortgage even as between
the parties, but under article 2125 of the new Civil Code (in effect
since August 30, 1950), this is no longer so.
"If the instrument is not recorded, the mortgage is nonetheless
binding between the parties." (Art 2125, New Civil Code
The Valdehuezas having remained in possession of the land and the
realty taxes having been paid by them, the contracts which purported to
bepacto de retro transactions are presumed to be equitable mortgages,5
whether registered or not, there being no third parties involved.
2. The imposition of legal interest on the amounts subject of the
equitable mortgages, P1,200 and P300, respectively, is without
legal basis, for, "No interest shall be due unless it has been
expressly stipulated in writing (Article 1956, new Civil Code)
V. Disposition
ACCORDINGLY, the judgment a quo is hereby modified, as follows:
(a) the amounts of P1,200 and P300 mentioned in Annexes E and D shall
bear interest at six percent per annum from the nality of this decision; and
(b) the parcel of land covered by Annex D shall be treated in the same
manner as that covered by Annex E, should the defendants fail to pay to the
plaintiff the sum of P300 within 90 days from the finality of this decision. In
all other respects the judgment is affirmed. No costs.
VI. Notes
PONENTE: Castro
DIGEST MAKER:
 B2022 REPORTS ANNOTATED VOL 32 [August 6, 1975]

Tan v Valdehueza Tan v Valdehueza

Sale With Pacto de Retro Transfer of Ownership

A sale with pacto de retro transfers the legal title to the vendee a retro.
The essence of a pacto de retro sale is that the title and ownership of the
property sold are immediately vested in the vendee a retro, subject to the
resolutory condition of repurchase by a vendor a retro to repurchase the
property within the period agreed upon by them, or, in the absence thereof,
as provided by law, vests upon the vendee a retro absolute title and
ownership over the property sold by operation of law. The failure of the
vendee a retro to consolidate his title under Article 1607 of the New Civil
Code does not impair such title and ownership because the method
prescribed thereunder is merely for the purpose of registering and
consolidating titles to the property. (Cadungog v. Yap, G.R. No. 161223,
September 12, 2005).

G.R. NO: PONENTE: Castro

ARTICLE; TOPIC OF CASE: DIGEST MAKER: