2016 (Civil Law) Bar Exam Questions: Question 12

[Answer/discuss the question below, or see 2016 bar exam Civil Law Instructions; 2016 Labor Law Questions:   12345678910111213141516171819 and 20; See also 2016 Bar Exam: Information, Discussions, Tips, Questions and Results]

-XII-

On March 13, 2008, Ariel entered into a Deed of Absolute Sale (DAS) with Noel where the former sold his titled lot in Quezon City with an area of three hundred (300) square meters to the latter for the price o f P300,000.00. The prevailing market value o f the lot was P3,000.00 per square meter. On March 20, 2008, they executed another “Agreement To Buy Back/Redeem Property” where Ariel was given an option to repurchase the property on or before March 20, 2010 for the same price. Ariel, however, remained in actual possession ofthe lot. Since Noel did not pay the taxes, Ariel paid the real property taxes to avoid a delinquency sale.

On March 21, 2010, Ariel sent a letter to Noel, attaching thereto a manager’s check for P300,000.00 manifesting that he is redeeming the property. Noel rejected the redemption claiming that the DAS was a true and valid sale representing the true intent of the parties. Ariel filed a suit for the nullification ofthe DAS or the reformation of said agreement to that of a Loan with Real Estate Mortgage. He claims the DAS and the redemption agreement constitute an equitable mortgage. Noel however claims it is a valid sale with pacto de retro and Ariel clearly failed to redeem the property.

As the RTC judge, decide the case with reasons. (5%)

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