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Real Estate Dispute: Pacto de Retro

The document summarizes a court case between Solid Homes, Inc. and State Financing Center, Inc. regarding a real estate mortgage and memorandum of agreement. Solid Homes executed a mortgage in favor of State Financing and they signed a memorandum where Solid Homes had the right to repurchase the properties within 180 days by paying 60% of the loan. Solid Homes failed to pay within 180 days. The court ruled that the memorandum was valid and binding, and that State Financing improperly consolidated title in its name, but this did not entitle Solid Homes to damages without proof of malice or actual damages suffered. The lower courts nullified the consolidation of ownership to address the issue.

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Harry Dave Ocampo Pagaoa
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754 views1 page

Real Estate Dispute: Pacto de Retro

The document summarizes a court case between Solid Homes, Inc. and State Financing Center, Inc. regarding a real estate mortgage and memorandum of agreement. Solid Homes executed a mortgage in favor of State Financing and they signed a memorandum where Solid Homes had the right to repurchase the properties within 180 days by paying 60% of the loan. Solid Homes failed to pay within 180 days. The court ruled that the memorandum was valid and binding, and that State Financing improperly consolidated title in its name, but this did not entitle Solid Homes to damages without proof of malice or actual damages suffered. The lower courts nullified the consolidation of ownership to address the issue.

Uploaded by

Harry Dave Ocampo Pagaoa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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DOCTRINE: In a contract of sale with pacto de retro, the vendee has a right to the immediate

possession of the property sold, unless otherwise agreed upon. It is basic that in a pacto de retro
sale, the title and ownership of the property sold are immediately vested in the vendee a retro,
subject only to the resolutory condition of repurchase by the vendor a retro within the stipulated
period.

SOLID HOMES, INC. v. HON. COURT OF APPEALS, STATE FINANCING CENTER,


INC., and REGISTER OF DEEDS FOR RIZAL

G.R. No. 117501. July 8, 1997

FACTS:

On 12 October 1970 petitioners executed a real estate mortgage in favor of respondent bank as
Solid Homes and State Financing executed a Memorandum of Agreement in which the former promised
to pay the latter 60% of the loan obligation within180 days from signing thereof. On the other hand, said
Memorandum grants Solid Homes the right to repurchase the subject properties. Solid Homes failed to
pay 60% of the loan obligation as stipulated in the Memorandum. Before the expiration of the period
within which to repurchase the subject property, Solid Homes sought the annulment of the memorandum,
alleging among others that the same violates the prohibition against pactum commisorium under Art.
2088 of the Civil Code. The trial court, however, ruled against Solid homes and declared that the said
memorandum is valid and binding. Both parties appealed to the CA which rendered judgment in favour of
State Financing. The appellate court ordered Solid Homes to deliver possession of the subject properties
to State Financing.

ISSUE:

Whether Solid Homes is entitled to the subject properties.

HELD:

YES.

The only legal transgression of State Financing was its failure to observe the proper procedure in
effecting the consolidation of the titles in its name. But this does not automatically entitle the petitioner to
damages absent convincing proof of malice and bad faith on the part of private respondent and actual
damages suffered by petitioner as a direct and probable consequence thereof. In fact, the evidence
proffered by petitioner consists of mere conjectures and speculations with no factual moorings.
Furthermore, such transgression was addressed by the lower courts when they nullified the consolidation
of ownership over the subject properties in the name of respondent corporation, because it had been
effected in contravention of the provisions of Article 1607 of the Civil Code. Such rulings are consistent
with law and jurisprudence.

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