8/4/2019 Gardner v CA
1/1
Gardner v. Court of Appeals (Nov. 29, 1997) 80 SCRA 395
Facts: Petitioner obtained on credit from the grocery store of
private respondents somepetty cash and a variety of consumer goods
such as groceries, toiler articles, rice and
other necessities for home use.
To pay for the debt, she executed Deed of Sale with right to
repurchase for a parcel ofSecano Land with all the improvements
therein.
The land total was P2, 150, the debt: P7,000
Petitioner continued her credit line and her obligation grew.
She issued anotherinstrument to increase the amount involved in the
previous instrument.
It seems that within the 10 year period to repurchase the land,
she offered and tendered
payment to the respondents on various occasions but it was
repeatedly turned down
because of the two children of the the private respondents who
demanded payment forP50,000 later reduced to P45,000.
Lawyer of the petitioner sent notice for deposit for
consignation of the total amount due
to CFI Laguna. They agreed later on to give respondent a
preferential right to buy the lot
for P1,500 per hectar but Gardner sold it to one, Sally Lopez
for P5,000.Private respondents contended that they allegedly made
improvements on the land a total
of not less than P30,000. LC declared it was a contract of
equitable mortgage and not acontract of sale with right to
repurchase. CA affirmed validly made consignation but
declared Gardener guilty of breach of contract.
Issue: WON it was an equitable mortgage? WON the respondents
were entitled toreimbursement of the improvements?
Held: The deed of Sale with pacto de retro having been declared
by the TC and CA asequitable mortgage was sold as security of the
loan. The mortgage was merely an
accessory to the principal obligation; there is no other
consideration for the stipulationinserted in the instrument
denominated Deed of Sale with right to repurchasestipulation null
and void.
Since it was a mortgage, the mortgagee who is in possession of
the mortgaged property
and introduces improvements therein is not entitled to
reimbursement for the valuethereof upon the redemption of the
mortgage, which could have been anytime before
expiration of the redemption period.
Art. 2125 NCC The persons in whose favor the law establishes a
mortgage have no
other right than to demand execution and recording of the
document in which themortgage is formalized.
To hold otherwise would render redemption oppressive and onerous
to the owner-
redemptioner as the mortageee can just make a lot of
improvements as to make the ownerfinancially incapable of redeeming
the mortgage.
