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    Martires vs. Chua

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    Zandra Leigh
    Martires vs. Chua involved a loan from the Martires spouses to Menelia Chua, secured by a real estate mortgage over 24 lots owned by Chua. Chua failed to fully repay the loan. Subsequently, the lots were transferred to the Martires via deed of transfer without foreclosure of the mortgage. The court ruled the deed of transfer should be presumed an equitable mortgage because the true intention was for the property to serve as security for the loan, not to transfer ownership. While the deed purported to transfer ownership, the circumstances show it was executed to circumvent the original agreement and deprive Chua of the mortgaged property without foreclosure.

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    Martires vs. Chua

    Uploaded by

    Zandra Leigh
    88 views1 page
    Martires vs. Chua involved a loan from the Martires spouses to Menelia Chua, secured by a real estate mortgage over 24 lots owned by Chua. Chua failed to fully repay the loan. Subsequently, the lots were transferred to the Martires via deed of transfer without foreclosure of the mortgage. The court ruled the deed of transfer should be presumed an equitable mortgage because the true intention was for the property to serve as security for the loan, not to transfer ownership. While the deed purported to transfer ownership, the circumstances show it was executed to circumvent the original agreement and deprive Chua of the mortgaged property without foreclosure.

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    Civil Law Digest

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    Martires vs. Chua involved a loan from the Martires spouses to Menelia Chua, secured by a real estate mortgage over 24 lots owned by Chua. Chua failed to fully repay the loan. Subsequently, the lots were transferred to the Martires via deed of transfer without foreclosure of the mortgage. The court ruled the deed of transfer should be presumed an equitable mortgage because the true intention was for the property to serve as security for the loan, not to transfer ownership. While the deed purported to transfer ownership, the circumstances show it was executed to circumvent the original agreement and deprive Chua of the mortgaged property without foreclosure.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    88 views1 page

    Martires vs. Chua

    Uploaded by

    Zandra Leigh
    Martires vs. Chua involved a loan from the Martires spouses to Menelia Chua, secured by a real estate mortgage over 24 lots owned by Chua. Chua failed to fully repay the loan. Subsequently, the lots were transferred to the Martires via deed of transfer without foreclosure of the mortgage. The court ruled the deed of transfer should be presumed an equitable mortgage because the true intention was for the property to serve as security for the loan, not to transfer ownership. While the deed purported to transfer ownership, the circumstances show it was executed to circumvent the original agreement and deprive Chua of the mortgaged property without foreclosure.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Martires vs.

    Chua
    Facts:
    Menelia Chua borrowed from spouses Martires the amount of P150k and secured the loan with a real estate
    mortgage over 24 memorial lots covered by TCT, owned by Chua together with her mother. She committed to
    pay a monthly interest of 8% and an additional 10% monthly interest in case of default.
    Chua failed to fully settle her obligation.
    Subsequently, without foreclosure of the mortgage, the subject lots were transferred in the name of the
    spouses Martires via a Deed of Transfer.
    Chua then filed a complaint against the spouses, alleging among others that the ownership of the subject lots
    was transferred by virtue of a forged Deed of Transfer and Affidavit of Warranty, and prayed for the same to
    be annulled.
    RTC ruled in favor of the spouses. On appeal, CA affirmed, and upon a Motion for Reconsideration, it was
    reversed and set aside.
    The CA concluded that the Deed of Transfer, which on its face, transfers ownership of the subject property to
    petitioners, is actually an equitable mortgage, because the true intention of Chua was merely to provide
    security for her loan and not to transfer ownership of the property to the spouses.
    Issue: WON the Deed of Transfer shall be presumed to be an equitable mortgage?
    Held:
    YES. An equitable mortgage, although lacking in some formality, or form or words, or other requisites
    demanded by a statute, nevertheless reveals the intention of the parties to charge real property as security for
    a debt, there being no impossibility nor anything contrary to law in this intent.
    Where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the
    payment of a debt or the performance of any other obligation, it is presumed to be an equitable mortgage.
    In this case, it has been established that the intent of both parties is that the subject property shall serve as
    security for Chua’s obligation to the spouses.
    As pointed out by the CA, the circumstances surrounding the execution of the disputed Deed of Transfer
    would show that the document was executed to circumvent the terms of the original agreement and deprive
    respondent of the mortgaged property without the requisite foreclosure.
    The sale of the subject property, proven by the Deed of Transfer, was simulated to cover up the automatic
    transfer of ownership in the spouses’ favor. While there was no stipulation in the mortgage contract of the
    automatic appropriation of the property in the event that Chua fails to pay, the subsequent acts of the parties
    points to the conclusion that the spouses were empowered to acquire ownership of the disputed property
    without need of any foreclosure.

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