THIRD DIVISION

[G.R. No. 142944. April 15, 2005]

EDENBERT MADRIGAL AND VIRGILIO MALLARI, petitioners, vs. THE

COURT OF APPEALS AND JOSE MALLARI, respondents.
DECISION
GARCIA, J.:

Under consideration is this appeal by way of a petition for review on certiorari under
Rule 45 of the Rules of Court to nullify and set aside the following issuances of the
Court of Appeals in CA-G.R. CV No. 45488, to wit:
1. Decision dated 15 October 1999,[1] affirming an earlier decision of the Regional
Trial Court at Olongapo City in a suit for annulment, redemption and damages with
prayer for preliminary injunction and/or temporary restraining order, thereat
commenced by the herein private respondent against the petitioners; and
2. Resolution dated 10 April 2000,[2] denying petitioners motion for reconsideration.

The case is cast against the following factual backdrop:

Private respondent Jose Mallari and his wife Fermina Mallari are the owners of a
340-square meter residential lot with a 2-storey residential house erected thereon,
situated at Olongapo City. The couple had ten (10) children, five (5) of whom are staying
with them in the same house while the other five (5) are either residing abroad or
elsewhere in the Philippines.
In need of money for his wifes planned travel to the United States, Jose thought of
mortgaging the above property with a bank. However, his son Virgilio Mallari who is
residing with his own family somewhere in San Ildefonso, Bulacan convinced Jose not
to proceed with the intended mortgage and to instead assign to him a portion of the
same property, assuring his father that the latter could continue in occupancy of the
property and that he will allow his sister Elizabeth who operates a store thereat to
continue with the same. Virgilio told his father, however, that he will occupy one of the
rooms in the house in case he goes to Olongapo City on vacation and that he will
renovate the other room and reserve it for his mother when she comes back from the
States. Virgilio assured his father that he will not dispose of the property without his
fathers consent and that the latter could redeem the said property any time he acquires
money.
And so, finding no reason to doubt Virgilios words, Jose did not anymore proceed
with his original idea of mortgaging the property with a bank. Instead, on 22 October
1987, he and his wife Fermina executed a document denominated as Deed of

Absolute Sale, whereunder the couple appeared to have conveyed to their son Virgilio
Mallari the house and lot in question for a consideration of P50,000.00 although the
property easily commands much more at that time. Worse, the deed of conveyance
described the properties sold as a one-storey residential house and the 135-square
meter lot whereon it stands even as the subject properties actually consist of a 2-storey
residential house sitting on a 340-square meter parcel of land.
Things turned for the worse to the unsuspecting Jose Mallari when, without his
knowledge, his son Virgilio, via a document bearing date 25 June 1988 and
entitled Kasulatan ng Bilihang Tuluyan, sold the same property for the same amount
of P50,000.00 to Edenbert Madrigal, a longtime neighbor of the Mallaris in the area.
True enough, sometime thereafter, to Joses great shock, he was demanded by
Edenbert Madrigal to vacate the subject property. It was then that Jose came to know
for the first time of the sale of his property by his son Virgilio in favor of Edenbert
Madrigal thru the aforementioned June 25, 1988 Kasulatan ng Bilihang Tuluyan.
It was against the foregoing backdrop of events when, on 7 September 1988, in the
Regional Trial Court at Olongapo City, Jose Mallari filed against his son Virgilio Mallari
and Edenbert Madrigal the complaint for annulment, redemption and damages with
prayer for preliminary injunction/temporary restraining order in this case. In his
complaint, docketed in the same court as Civil Case No. 481-0-88 and raffled to Branch
72 thereof, plaintiff Jose Mallari prayed that the Deed of Absolute Sale executed by him
and his wife Fermina on 22 October 1987 in favor of their son Virgilio Mallari be
declared null and void, or, in the alternative, that he be allowed to redeem the subject
property at a reasonable price. He likewise prayed the court for a writ of preliminary
injunction and/or to issue ex parte a temporary restraining order enjoining defendants
Virgilio Mallari and Edenbert Madrigal from entering, demolishing or introducing
improvements on the subject properties, plus an award of actual and moral damages
and attorneys fees.
After due proceedings, the trial court, in a decision dated 29 September 1993,
rendered judgment for plaintiff Jose Mallari by ordering defendant Edenbert Madrigal
to allow the former to redeem the subject property based on the same amount it was
sold to him by his co-defendant Virgilio Mallari, and for the two (2) defendants jointly
and severally to pay plaintiff Jose Mallari moral and exemplary damages, attorneys fees
and the cost of suit. More specifically, the trial courts decision dispositively reads:
[3]

PREMISES CONSIDERED, this Court finds and so holds that since plaintiff has
sufficiently established preponderance of evidence against the defendants, judgment is
hereby rendered ordering defendant Edenbert Madrigal to allow plaintiff to redeem
the subject property based on the consideration of sale marked as Exhibit B; and for
defendants jointly and severally to pay plaintiff (1) moral damages in the sum
of P15,000.00; (2) exemplary damages of P5,000.00; (3) P10,000.00 as attorneys fees;
and (4) to pay the cost of suit.
All claims of defendants are denied for lack of merit.

SO ORDERED.
Obviously dissatisfied, both defendants went on appeal to the Court of Appeals
whereat their recourse was docketed as CA-G.R. CV No. 45488.
As stated at threshold hereof, the Court of Appeals, in a decision dated 15
October 1999, affirmed en toto the appealed decision of the trial court, thus:
[4]

WHEREFORE, finding that the lower court did not err in issuing the assailed
Decision, this Court hereby AFFIRMS the same in its entirety.
SO ORDERED.
In time, appellants Virgilio Mallari and Edenbert Madrigal moved for a
reconsideration but their motion was denied by the appellate court in its Resolution of
10 April 2000.
[5]

Hence, their present recourse, submitting for our consideration the following issues:
I

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE

QUESTIONED DEED OF SALE IS A MORTGAGE
II

WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT RULING THAT

PETITIONER EDENBERT MADRIGAL WAS A BUYER ON (sic) GOOD FAITH
III

WHETHER OR NOT THE COURT OF APPEALS ERRED IN AFFIRMING THE

TRIAL COURTS DECISION AWARDING MORAL, EXEMPLARY DAMAGES
AND ATTORNEYS FEES IN FAVOR OF PRIVATE RESPONDENT
We DENY.
Petitioners fault the two (2) courts below for construing the Deed of Absolute
Sale executed by private respondent Jose Mallari and his wife Fermina Mallari in favor
of their son Virgilio Mallari as an equitable mortgage and not as an outright sale as the
document itself proclaims.
We rule and so hold that both courts correctly construed the aforementioned Deed
of Absolute Sale as an equitable mortgage and not a sale, as it purports to be. As aptly
pointed out by the Court of Appeals in its assailed decision of 15 October 1999, to which
we are in full accord:

xxx. Evidence clearly shows that there was indeed no intent to sell the subject
property. Rather, what transpired between the parties, who were father and son, was
only a mortgage involving P50,000.00 over a portion of a lot with a house in
Olongapo City. Circumstances surrounding the transaction between [respondent Jose
Mallari] and [petitioner] Virgilio Mallari pointed only to one thing, that [respondent
Jose Mallari] was in need of money to finance the US trip of his wife and he planned
to mortgage the subject property with a bank but he was prevailed by his son, herein
[petitioner] Virgilio Mallari, not to proceed with his plan and he gave a tempting offer
to his father which the latter cannot refuse. In dire need of money, coupled with the
fact that the one who offered help was his son who agreed to all the conditions such
as, the property will not be disposed without the consent of [respondent]; petitioner
[Virgilio Mallari]will renovate a room which will be used by his mother upon her
return from the US; [petitioner Virgilio Mallari] will allow his sister to continue using
a portion of the property as a store; one room will be for [petitioner Virgilio Mallaris]
use while on vacation; and [respondent Jose Mallari] would redeem the property as
soon as his finances will improve and for [petitioner Virgilio Mallari] to return the
same, [respondent Jose Mallari] signed a document, a Deed of Sale, although the
agreement was only a mortgage. The consideration appearing in the Deed of Sale is
grossly inadequate considering the location of the property, the area and the fact that it
was a two-storey building or house. If the intention was really to sell, why was there a
need for [petitioner Virgilio Mallari] to seek the consent of [respondent Jose Mallari]
if the property will be sold to third person?
Consistent with their thesis that the aforesaid Deed of Absolute Sale executed by
Virgilios parents is clearly a document of sale as its very language unmistakably states,
petitioners fault the trial court for receiving parol evidence to establish that the
instrument in question is actually one of equitable mortgage. Indirectly, petitioners also
put the Court of Appeals to task for giving weight to those evidence instead of rejecting
them, conformably with the Parol Evidence Rule under Section 9, Rule 130 of the Rules
of Court.
We are not persuaded.
To begin with, we cannot view the Deed of Absolute Sale in question in isolation of
the circumstances under which the same was executed by Virgilios parents, more so in
the light of his fathers disavowal of what the document, on its face, purports to state.
Then, too, there is the ruling of this Court in Lustan vs. CA to the effect that even
if the document appears to be a sale, parol evidence may be resorted to if the same
does not express the true intent of the parties. In the very words of Lustan:
[6]

Even when a document appears on its face to be a sale, the owner of the property may
prove that the contract is really a loan with mortgage by raising as an issue the fact
that the document does not express the true intent of the parties. In this case, parol
evidence then becomes competent and admissible to prove that the instrument was in

truth and in fact given merely as a security for the repayment of a loan. And upon
proof of the truth of such allegations, the court will enforce the agreement or
understanding in consonance with the true intent of the parties at the time of the
execution of the contract.
In any event, at bottom of petitioners first submission is their inability to accept the
factual findings of the two (2) courts below that the transaction between petitioner
Virgilio Mallari and his parents, albeit denominated as one of absolute sale, is in reality
an equitable mortgage. In short, petitioners would want us to revisit the factual findings
of both courts, scrutinize and examine those findings anew and calibrate the validity of
their conclusions on the basis of our own factual assessment.
The desired task cannot be done. Time and again, we have made it clear that this
Court is not a trier of facts, and that in a petition for review under Rule 45, only
questions of law may be raised in this Court. To reiterate what we have said
in Bernardo vs. CA:
[7]

The Supreme Courts jurisdiction is limited to reviewing errors of law that may have
been committed by the lower court. The Supreme Court is not a trier of facts. It leaves
these matters to the lower court, which have more opportunity and facilities to
examine these matters. This same Court has declared that it is the policy of the Court
to defer to the factual findings of the trial judge, who has the advantage of directly
observing the witnesses on the stand and to determine their demeanor whether they
are telling or distorting the truth.
And again in Remalante vs. Tibe:

[8]

The rule in this jurisdiction is that only questions of law may be raised in a petition for
certiorari under Rule 45 of the Revised Rules of Court. The jurisdiction of the
Supreme Court in cases brought to it from the Court of Appeals is limited to
reviewing and revising the errors of law imputed to it, its findings of fact being
conclusive. [Chan vs. Court of Appeals, G.R. No. L-27488, June 30, 1970, 33 SCRA
737, reiterating a long line of decisions]. This Court has emphatically declared that it
is not the function of the Supreme Court to analyze or weigh such evidence all over
again, its jurisdiction being limited to reviewing errors of law that might have been
committed by the lower court [Tiongco v. De la Merced, G.R. No. L-24426, July 25,
1974, 58 SCRA 89; Corona vs. Court of Appeals, G.R. No. L-62482, April 28, 1983,
121 SCRA 865; Banigued vs. Court of Appeals, G.R. No. L-47531, February 20,
1984, 127 SCRA 596].
We do acknowledge that the rule thus stated is not casts in stone. For sure, it
admits of exceptions. So it is that in Insular Life Assurance Company, Ltd. Vs. CA,
we wrote:
[9]

[i]t is a settled rule that in the exercise of the Supreme Courts power of review, the
Court is not a trier of facts and does not normally undertake the re-examination of the
evidence presented by the contending parties during the trial of the case considering
that the findings of facts of the CA are conclusive and binding on the Court. However,
the Court had recognized several exceptions to this rule, to wit: (1) when the findings
are grounded entirely on speculation, surmises or conjectures; (2) when the inference
made is manifestly mistaken; (3) when there is grave abuse of discretion; (4) when the
judgment is based on a misapprehension of facts; (5) when the findings of facts are
conflicting; (6) when in making its findings the Court of Appeals went beyond the
issues of the case, or its findings are contrary to the admissions of both the appellant
and the appellee; (7) when the findings are contrary to the trial court; (8) when the
findings are conclusions without citation of specific evidence on which they are
based; (9) when the facts set forth in the petition as well as in the petitioners main and
reply briefs are not disputed by the respondent; (10) when the findings of fact are
premised on the supposed absence of evidence and contradicted by the evidence on
record; and (11) when the Court of Appeals manifestly overlooked certain relevant
facts not disputed by the parties, which, if properly considered, would justify a
different conclusion.
Unfortunately for the petitioners, however, we have made a close hard look into this
case and found none of the foregoing exceptions as obtaining herein to warrant our
departure from the established norm.
Nor are we inclined to disturb the findings of the two (2) courts below that petitioner
Edenbert Madrigal is not buyer in good faith. Again, a reversal of such finding would
impose upon us a reevaluation of the same set of facts appreciated by said courts in
arriving at their common conclusion that Madrigal, contrary to what he proclaims himself
to be, is not a buyer in good faith. At any rate, we nonetheless took the pains of
reviewing the factors taken into account by both courts in rejecting Madrigals claim of
being a buyer in good faith and found no reason to disagree with their rejection thereof.
With the view we take of this case, petitioners lament against the award of moral
and exemplary damages and attorneys fees in favor of respondent Jose Mallari, based
as their lament is on their contention that respondent has no cause of action against
them, must simply fall.
WHEREFORE, the instant petition is hereby DENIED and the assailed decision and
resolution of the Court of Appeals AFFIRMED.
Costs against petitioners.
SO ORDERED.
Panganiban,
JJ., concur.

(Chairman),

Sandoval-Gutierrez,

Corona, and Carpio-Morales,

[1]

Penned by Associate Justice Remedios Salazar-Fernando and concurred in by Associate Justices

Buenaventura J. Guerrero and Portia A. Hormachuelos.

[2]

Rollo, p. 38.

[3]

Rollo, pp. 65-69.

[4]

Rollo, pp. 70-77.

[5]

Rollo, p. 38.

[6]

334 Phil. 609 [1997].

[7]

216 SCRA 244 [1992].

[8]

158 SCRA 138 [1988].

[9]

G.R. No. 126850, April 28, 2004.