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G.R. No. 166714 February 9, 2007AMELIA S. ROBERTS,Petitioner,vs.MARTIN B. PAPIO,Respondent.D E C I S I O NCALLEJO, SR.,J.:Assailed in this petition for review on certiorari is the Decision1of the Court of Appeals (CA), in CA-G.R. CV No. 69034 which reversed and set aside the Decision2of the Regional Trial Court (RTC), Branch 150, Makati City, in Civil Case No. 01-431. The RTC ruling had affirmed with modification the Decision3of the Metropolitan Trial Court (MeTC), Branch 64, Makati City in Civil Case No. 66847. The petition likewise assails the Resolution of the CA denying the motion for reconsideration of its decision.The AntecedentsThe spouses Martin and Lucina Papio were the owners of a 274-square-meter residential lot located in Makati (now Makati City) and covered by Transfer Certificate of Title (TCT) No. S-44980.4In order to secure aP59,000.00 loan from the Amparo Investments Corporation, they executed a real estate mortgage on the property. Upon Papios failure to pay the loan, the corporation filed a petition for the extrajudicial foreclosure of the mortgage.Since the couple needed money to redeem the property and to prevent the foreclosure of the real estate mortgage, they executed a Deed of Absolute Sale over the property on April 13, 1982 in favor of Martin Papios cousin, Amelia Roberts. Of theP85,000.00 purchase price,P59,000.00 was paid to the Amparo Investments Corporation, while theP26,000.00 difference was retained by the spouses.5As soon as the spouses had settled their obligation, the corporation returned the owners duplicate of TCT No. S-44980, which was then delivered to Amelia Roberts.Thereafter, the parties (Amelia Roberts as lessor and Martin Papio as lessee) executed a two-year contract of lease dated April 15, 1982, effective May 1, 1982. The contract was subject to renewal or extension for a like period at the option of the lessor, the lessee waiving thereby the benefits of an implied new lease. The lessee was obliged to pay monthly rentals ofP800.00 to be deposited in the lessors account at the Bank of America, Makati City branch.6On July 6, 1982, TCT No. S-44980 was cancelled, and TCT No. 114478 was issued in the name of Amelia Roberts as owner.7Martin Papio paid the rentals from May 1, 1982 to May 1, 1984, and thereafter, for another year.8He then failed to pay rentals, but he and his family nevertheless remained in possession of the property for a period of almost thirteen (13) years.In a letter dated June 3, 1998, Amelia Roberts, through counsel, reminded Papio that he failed to pay the monthly rental ofP2,500.00 from January 1, 1986 to December 31, 1997, andP10,000.00 from January 1, 1998 to May 31, 1998; thus, his total liability wasP410,000.00. She demanded that Papio vacate the property within 15 days from receipt of the letter in case he failed to settle the amount.9Because he refused to pay, Papio received another letter from Roberts on April 22, 1999, demanding, for the last time, that he and his family vacate the property.10Again, Papio refused to leave the premises.On June 28, 1999, Amelia Roberts, through her attorney-in-fact, Matilde Aguilar, filed a Complaint11for unlawful detainer and damages against Martin Papio before the MeTC, Branch 64, Makati City. She alleged the following in her complaint:Sometime in 1982 she purchased from defendant a 274-sq-m residential house and lot situated at No. 1046 Teresa St., Brgy. Valenzuela, Makati City.12Upon Papios pleas to continue staying in the property, they executed a two-year lease contract13which commenced on May 1, 1982. The monthly rental wasP800.00. Thereafter, TCT No. 11447814was issued in her favor and she paid all the realty taxes due on the property. When the term of the lease expired, she still allowed Papio and his family to continue leasing the property. However, he took advantage of her absence and stopped payment beginning January 1986, and refused to pay despite repeated demands. In June 1998, she sent a demand letter15through counsel requiring Papio to pay rentals from January 1986 up to May 1998 and to vacate the leased property. The accumulated arrears in rental are as follows: (a)P360,000.00 from January 1, 1986 to December 31, 1997 atP2,500.00 per month; and (b)P50,000.00, from January 1, 1998 to May 31, 1998 atP10,000.00 per month.16She came to the Philippines but all efforts at an amicable settlement proved futile. Thus, in April 1999, she sent the final demand letter to defendant directing him and his family to pay and immediately vacate the leased premises.17Roberts appended to her complaint copies of the April 13, 1982 Deed of Absolute Sale, the April 15, 1982 Contract of Lease, and TCT No. 114478.In his Answer with counterclaim, Papio alleged the following:He executed the April 13, 1982 deed of absolute sale and the contract of lease. Roberts, his cousin who is a resident of California, United States of America (USA), arrived in the Philippines and offered to redeem the property. Believing that she had made the offer for the purpose of retaining his ownership over the property, he accepted. She then remittedP59,000.00 to the mortgagor for his account, after which the mortgagee cancelled the real estate mortgage. However, he was alarmed when the plaintiff had a deed of absolute sale over the property prepared (forP83,000.00 as consideration) and asked him to sign the same. She also demanded that the defendant turn over the owners duplicate of TCT No. S-44980. The defendant was in a quandary. He then believed that if he signed the deed of absolute sale, Roberts would acquire ownership over the property. He asked her to allow him to redeem or reacquire the property at any time for a reasonable amount.18When Roberts agreed, Papio signed the deed of absolute sale.Pursuant to the right to redeem/repurchase given him by Roberts, Papio purchased the property forP250,000.00. In July 1985, since Roberts was by then already in the USA, he remitted to her authorized representative, Perlita Ventura, the amount ofP150,000.00 as partial payment for the property.19On June 16, 1986, she again remittedP100,000.00, through Ventura. Both payments were evidenced by receipts signed by Ventura.20Roberts then declared that she would execute a deed of absolute sale and surrender the title to the property. However, Ventura had apparently misappropriatedP39,000.00 out of theP250,000.00 that she had received; Roberts then demanded that she pay the amount misappropriated before executing the deed of absolute sale. Thus, the sole reason why Roberts refused to abide by her promise was the failure of her authorized representative to remit the full amount ofP250,000.00. Despite Papios demands, Roberts refused to execute a deed of absolute sale. Accordingly, defendant posited that plaintiff had no cause of action to demand payment of rental and eject him from the property.Papio appended to his Answer the following: (1) the letter dated July 18, 1986 of Perlita Ventura to the plaintiff wherein the former admitted having used the money of the plaintiff to defray the plane fares of Perlitas parents to the USA, and pleaded that she be allowed to repay the amount within one year; (b) the letter of Eugene Roberts (plaintiffs husband) to Perlita Ventura dated July 25, 1986 where he accused Ventura of stealing the money of plaintiff Amelia (thus preventing the latter from paying her loan on her house and effect the cancellation of the mortgage), and demanded that she deposit the balance;21and (c) plaintiffs letter to defendant Papio dated July 25, 1986 requesting the latter to convince Ventura to remit the balance ofP39,000.00 so that the plaintiff could transfer the title of the property to the defendant.22Papio asserted that the letters of Roberts and her husband are in themselves admissions or declarations against interest, hence, admissible to prove that he had reacquired the property although the title was still in her possession.In her Affidavit and Position Paper,23Roberts averred that she had paid the real estate taxes on the property after she had purchased it; Papios initial right to occupy the property was terminated when the original lease period expired; and his continued possession was only by mere tolerance. She further alleged that the Deed of Sale states on its face that the conveyance of the property was absolute and unconditional. She also claimed that any right to repurchase the property must appear in a public document pursuant to Article 1358, Paragraph 1, of the Civil Code of the Phililppines.24Since no such document exists, defendants supposed real interest over the property could not be enforced without violating the Statute of Frauds.25She stressed that her Torrens title to the property was an "absolute and indefeasible evidence of her ownership of the property which is binding and conclusive upon the whole world."Roberts admitted that she demandedP39,000.00 from the defendant in her letter dated July 25, 1986. However, she averred that the amount represented his back rentals on the property.26She declared that she neither authorized Ventura to sell the property nor to receive the purchase price therefor. She merely authorized her to receive the rentals from defendant and to deposit them in her account. She did not know that Ventura had receivedP250,000.00 from Papio in July 1985 and on June 16, 1986, and had signed receipts therefor. It was only on February 11, 1998 that she became aware of the receipts when she received defendant Papios letter to which were appended the said receipts. She and her husband offered to sell the property to the defendant in 1984 for US$15,000.00 on a "take it or leave it" basis when they arrived in the Philippines in May 1984.27However, defendant refused to accept the offer. The spouses then offered to sell the property anew on December 20, 1997, forP670,000.00 inclusive of back rentals.28However, defendant offered to settle his account with the spouses.29Again, the offer came on January 11, 1998, but it was rejected. The defendant insisted that he had already purchased the property in July 1985 forP250,000.00.Roberts insisted that Papios claim of the right to repurchase the property, as well as his claim of payment therefor, is belied by his own letter in which he offered to settle plaintiffs claim for back rentals. Even assuming that the purchase price of the property had been paid through Ventura, Papio did not adduce any proof to show that Ventura had been authorized to sell the property or to accept any payment thereon. Any payment to Ventura could have no binding effect on her since she was not privy to the transaction; if at all, such agreement would be binding only on Papio and Ventura.She further alleged that defendants own inaction belies his claim of ownership over the property: first, he failed to cause any notice or annotation to be made on the Register of Deeds copy of TCT No. 114478 in order to protect his supposed adverse claim; second, he did not institute any action against Roberts to compel the execution of the necessary deed of transfer of title in his favor; and third, the defense of ownership over the property was raised only after Roberts demanded him to vacate the property.Based solely on the parties pleadings, the MeTC rendered its January 18, 2001 Decision30in favor of Roberts. The fallo of the decision reads:WHEREFORE, premises considered, finding this case for the plaintiff, the defendant is hereby ordered to:1. Vacate the leased premises known as 1046 Teresa St., Valenzuela, Makati City;2. Pay plaintiff the reasonable rentals accrual for the period January 1, 1996 to December 13, 1997 at the rate equivalent to Php2,500.00 per month and thereafter, Php10,000.00 from January 1998 until he actually vacates the premises;3. Pay the plaintiff attorneys fees as Php20,000.00; and4. Pay the costsSO ORDERED.31The MeTC held that Roberts merely tolerated the stay of Papio in the property after the expiration of the contract of lease on May 1, 1984; hence, she had a cause of action against him since the only elements in an unlawful detainer action are the fact of lease and the expiration of its term. The defendant as tenant cannot controvert the title of the plaintiff or assert any right adverse thereto or set up any inconsistent right to change the existing relation between them. The plaintiff need not prove her ownership over the property inasmuch as evidence of ownership can be admitted only for the purpose of determining the character and extent of possession, and the amount of damages arising from the detention.The court further ruled that Papio made no denials as to the existence and authenticity of Roberts title to the property. It declared that "the certificate of title is indefeasible in favor of the person whose name appears therein and incontrovertible upon the expiration of the one-year period from the date of issue," and that a Torrens title, "which enjoys a strong presumption of regularity and validity, is generally a conclusive evidence of ownership of the land referred to therein."As to Papios claim that the transfer of the property was one with right of repurchase, the MeTC held it to be bereft of merit since the Deed of Sale is termed as "absolute and unconditional." The court ruled that the right to repurchase is not a right granted to the seller by the buyer in a subsequent instrument but rather, a right reserved in the same contract of sale. Once the deed of absolute sale is executed, the seller can no longer reserve the right to repurchase; any right thereafter granted in a separate document cannot be a right of repurchase but some other right.As to the receipts of payment signed by Ventura, the court gave credence to Robertss declaration in her Affidavit that she authorized Ventura only to collect rentals from Papio, and not to receive the repurchase price. Papios letter of January 31, 1998, which called her attention to the fact that she had been sending people without written authority to collect money since 1985, bolstered the courts finding that the payment, if at all intended for the supposed repurchase, never redounded to the benefit of the spouses Roberts.Papio appealed the decision to the RTC, alleging the following:I.THE LOWER COURT GRAVELY ERRED IN NOT DISMISSING THE CASE FOR EJECTMENT OUTRIGHT ON THE GROUND OF LACK OF CAUSE OF ACTION.II.THE LOWER COURT GRAVELY ERRED IN NOT CONSIDERING THE DOCUMENTARY EVIDENCE ADDUCED BY DEFENDANT-APPELLANT WHICH ESTABLISHED THAT A REPURCHASE TRANSACTION EXISTED BETWEEN THE PARTIES ONLY THAT PLAINTIFF-APPELLEE WITHHELD THE EXECUTION OF THE ABSOLUTE DEED OF SALE AND THE TRANSFER OF TITLE OF THE SAME IN DEFENDANT-APPELLANTS NAME.III.THE LOWER COURT GRAVELY ERRED IN NOT CONSIDERING THAT THE LETTERS OF PLAINTIFF-[APPELLEE] AND OF HER HUSBAND ADDRESSED TO DEFENDANT-APPELLANT AND HIS WIFE ARE IN THEMSELVES ADMISSION AND/OR DECLARATION OF THE FACT THAT DEFENDANT-APPELLANT HAD DULY PAID PLAINTIFF-APPELLEE OF THE PURCHASE AMOUNT COVERING THE SUBJECT PROPERTY.IV.THE LOWER COURT GRAVELY ERRED IN NOT DISMISSING THE CASE FOR EJECTMENT OUTRIGHT CONSIDERING THAT PLAINTIFF-APPELLEE WHO IS [AN] AMERICAN CITIZEN AND RESIDENT THEREIN HAD NOT APPEARED IN COURT ONCE, NEITHER WAS HER ALLEGED ATTORNEY-IN-FACT, MATILDE AGUILAR NOR [DID] THE LATTER EVER [FURNISH] THE LOWER COURT A SPECIAL POWER OF ATTORNEY AUTHORIZING HER TO APPEAR IN COURT IN BEHALF OF HER PRINCIPAL.32Papio maintained that Roberts had no cause of action for eviction because she had already ceded her right thereto when she allowed him to redeem and reacquire the property upon payment ofP250,000.00 to Ventura, her duly authorized representative. He also contended that Robertss claim that the authority of Ventura is limited only to the collection of the rentals and not of the purchase price was a mere afterthought, since her appended Affidavit was executed sometime in October 1999 when the proceedings in the MeTC had already started.On March 26, 2001, Roberts filed a Motion for Issuance of Writ of Execution.33The court granted the motion in an Order34dated June 19, 2001. Subsequently, a Writ of Execution35pending appeal was issued on September 28, 2001. On October 29, 2001, Sheriff Melvin M. Alidon enforced the writ and placed Roberts in possession of the property.Meanwhile, Papio filed a complaint with the RTC of Makati City, for specific performance with damages against Roberts. Papio, as plaintiff, claimed that he entered into a contract of sale with pacto de retro with Roberts, and prayed that the latter be ordered to execute a Deed of Sale over `the property in his favor and transfer the title over the property to and in his name. The case was docketed as Civil Case No. 01-851.On October 24, 2001, the RTC rendered judgment affirming the appealed decision of the MeTC. The fallo of the decision reads:36Being in accordance with law and the circumstances attendant to the instant case, the court finds merit in plaintiff-appellees claim. Wherefore, the challenged decision dated January 18, 2001 is hereby affirmed in toto.SO ORDERED.37Both parties filed their respective motions for reconsideration.38In an Order39dated February 26, 2002, the court denied the motion of Papio but modified its decision declaring that the computation of the accrued rentals should commence from January 1986, not January 1996. The decretal portion of the decision reads:Wherefore, the challenged decision dated January 18, 2001 is hereby affirmed with modification that defendant pay plaintiff the reasonable rentals accrued for the period January 1,1986to December [31, 1997]per month and thereafter andP10,000.00 [per month] from January 1998 to October 28, 2001 when defendant-appellant actually vacated the subject leased premises.SO ORDERED.40On February 28, 2002, Papio filed a petition for review41in the CA, alleging that the RTC erred in not finding that he had reacquired the property from Roberts forP250,000.00, but the latter refused to execute a deed of absolute sale and transfer the title in his favor. He insisted that the MeTC and the RTC erred in giving credence to petitioners claim that she did not authorize Ventura to receive his payments for the purchase price of the property, citing Roberts letter dated July 25, 1986 and the letter of Eugene Roberts to Ventura of even date. He also averred that the MeTC and the RTC erred in not considering his documentary evidence in deciding the case.On August 31, 2004, the CA rendered judgment granting the petition. The appellate court set aside the decision of the RTC and ordered the RTC to dismiss the complaint. The decretal portion of the Decision42reads:WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE and a new one entered: (1) rendering an initial determination that the "Deed of Absolute Sale" dated April 13, 1982 is in fact an equitable mortgage under Article 1603 of the New Civil Code; and (2) resolving therefore that petitioner Martin B. Papio is entitled to possession of the property subject of this action; (3) But such determination of ownership and equitable mortgage are not clothed with finality and will not constitute a binding and conclusive adjudication on the merits with respect to the issue of ownership and such judgment shall not bar an action between the same parties respecting title to the land, nor shall it be held conclusive of the facts therein found in the case between the same parties upon a different cause of action not involving possession. All other counterclaims for damages are hereby dismissed. Cost against the respondent.SO ORDERED.43According to the appellate court, although the MeTC and RTC were correct in holding that the MeTC had jurisdiction over the complaint for unlawful detainer, they erred in ignoring Papios defense of equitable mortgage, and in not finding that the transaction covered by the deed of absolute sale by and between the parties was one of equitable mortgage under Article 1602 of the New Civil Code. The appellate court ruled that Papio retained the ownership of the property and its peaceful possession; hence, the MeTC should have dismissed the complaint without prejudice to the outcome of Civil Case No. 01-851 relative to his claim of ownership over the property.Roberts filed a motion for reconsideration of the decision on the following grounds:I. Petitioner did not allege in his Answer the defense of equitable mortgage; hence, the lower courts [should] not have discussed the same;II. Even assuming that Petitioner alleged the defense of equitable mortgage, the MeTC could not have ruled upon the said defense,III. The M[e]TC and the RTC were not remiss in the exercise of their jurisdiction.44The CA denied the motion.In this petition for review, Amelia Salvador-Roberts, as petitioner, avers that:I. THE HONORABLE COURT OF APPEALS GRIEVEOUSLY (SIC) ERRED IN DECLARING THAT THE M[e]TC AN(D) THE RTC WERE REMISS IN THE EXERCISE OF THAT JURISDICTION ACQUIRED BECAUSE IT DID NOT CONSIDER ALL PETITIONERS DEFENSE OF EQUITABLE MORTGAGE.II. THE HONORABLE COURT OF APPEALS GRIEVEOUSLY (SIC) ERRED IN REQUIRING THE M[e]TC AND RTC TO RULE ON A DEFENSE WHICH WAS NEVER AVAILED OF BY RESPONDENT.45Petitioner argues that respondent is barred from raising the issue of equitable mortgage because his defense in the MeTC and RTC was that he had repurchased the property from the petitioner; by such representation, he had impliedly admitted the existence and validity of the deed of absolute sale whereby ownership of the property was transferred to petitioner but reverted to him upon the exercise of said right. The respondent even filed a complaint for specific performance with damages, which is now pending in the RTC of Makati City, docketed as Civil Case No. 01-851 entitled"Martin B. Papio vs. Amelia Salvador-Roberts."In that case, respondent claimed that his transaction with the petitioner was a sale withpacto de retro. Petitioner posits that Article 1602 of the Civil Code applies only when the defendant specifically alleges this defense. Consequently, the appellate court was proscribed from finding that petitioner and respondent had entered into an equitable mortgage under the deed of absolute sale.Petitioner further avers that respondent was ably represented by counsel and was aware of the difference between a pacto de retro sale and an equitable mortgage; thus, he could not have been mistaken in declaring that he repurchased the property from her.As to whether a sale is in fact an equitable mortgage, petitioner claims that the issue should be properly addressed and resolved by the RTC in an action to enforce ownership, not in an ejectment case before the MeTC where the main issue involved is possessionde facto. According to her, the obvious import of the CA Decision is that, in resolving an ejectment case, the lower court must pass upon the issue of ownership (in this case, by applying the presumptions under Art. 1602) which, in effect, would use the same yardstick as though it is the main action. The procedure will not only promote multiplicity of suits but also place the new owner in the absurd position of having to first seek the declaration of ownership before filing an ejectment suit.Respondent counters that the defense of equitable mortgage need not be particularly stated to apprise petitioner of the nature and character of the repurchase agreement. He contends that he had amply discussed in his pleadings before the trial and appellate courts all the surrounding circumstances of the case, such as the relative situation of the parties at the time; their attitude, acts, conduct, and declarations; and the negotiations between them that led to the repurchase agreement. Thus, he argues that the CA correctly ruled that the contract was one of equitable mortgage. He insists that petitioner allowed him to redeem and reacquire the property, and accepted his full payment of the property through Ventura, the authorized representative, as shown by the signed receipts.The threshold issues are the following: (1) whether the MeTC had jurisdiction in an action for unlawful detainer to resolve the issue of who between petitioner and respondent is the owner of the property and entitled to the de facto possession thereof; (2) whether the transaction entered into between the parties under the Deed of Absolute Sale and the Contract of Lease is an equitable mortgage over the property; and (3) whether the petitioner is entitled to the material or de facto possession of the property.The Ruling of the CourtOn the first issue, the CA ruling (which upheld the jurisdiction of the MeTC to resolve the issue of who between petitioner or respondent is the lawful owner of the property, and is thus entitled to the material or de facto possession thereof) is correct. Section 18, Rule 70 of the Rules of Court provides that when the defendant raises the defense of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession. The judgment rendered in an action for unlawful detainer shall be conclusive with respect to the possession only and shall in no wise bind the title or affect the ownership of the land or building. Such judgment would not bar an action between the same parties respecting title to the land or building.46The summary nature of the action is not changed by the claim of ownership of the property of the defendant.47The MeTC is not divested of its jurisdiction over the unlawful detainer action simply because the defendant asserts ownership over the property.The sole issue for resolution in an action for unlawful detainer is material or de facto possession of the property. Even if the defendant claims juridical possession or ownership over the property based on a claim that his transaction with the plaintiff relative to the property is merely an equitable mortgage, or that he had repurchased the property from the plaintiff, the MeTC may still delve into and take cognizance of the case and make an initial or provisional determination of who between the plaintiff and the defendant is the owner and, in the process, resolve the issue of who is entitled to the possession. The MeTC, in unlawful detainer case, decides the question of ownership only if it is intertwined with and necessary to resolve the issue of possession.48The resolution of the MeTC on the ownership of the property is merely provisional or interlocutory. Any question involving the issue of ownership should be raised and resolved in a separate action brought specifically to settle the question with finality, in this case, Civil Case No. 01-851 which respondent filed before the RTC.The ruling of the CA, that the contract between petitioner and respondent was an equitable mortgage, is incorrect. The fact of the matter is that the respondent intransigently alleged in his answer, and even in his affidavit and position paper, that petitioner had granted him the right to redeem or repurchase the property at any time and for a reasonable amount; and that, he had, in fact, repurchased the property in July 1985 forP250,000.00 which he remitted to petitioner through an authorized representative who signed receipts therefor; he had reacquired ownership and juridical possession of the property after his repurchase thereof in 1985; and consequently, petitioner was obliged to execute a deed of absolute sale over the property in his favor.Notably, respondent alleged that, as stated in his letter to petitioner, he was given the right to reacquire the property in 1982 within two years upon the payment ofP53,000.00, plus petitioners airfare for her trip to the Philippines from the USA and back; petitioner promised to sign the deedof absolute sale. He even filed a complaint against the petitioner in the RTC, docketed as Civil Case No. 01-851, for specific performance with damages to compel petitioner to execute the said deed of absolute sale over the property presumably on the strength of Articles 1357 and 1358 of the New Civil Code. Certainly then, his claim that petitioner had given him the right to repurchase the property is antithetical to an equitable mortgage.An equitable mortgage is one that, although lacking in some formality, form or words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to change a real property as security for a debt and contain nothing impossible or contrary to law.49A contract between the parties is an equitable mortgage if the following requisites are present: (a) the parties entered into a contract denominated as a contract of sale; and (b) the intention was to secure an existing debt by way of mortgage.50The decisive factor is the intention of the parties.In an equitable mortgage, the mortgagor retains ownership over the property but subject to foreclosure and sale at public auction upon failure of the mortgagor to pay his obligation.51In contrast, in a pacto de retro sale, ownership of the property sold is immediately transferred to the vendee a retro subject only to the right of the vendor a retro to repurchase the property upon compliance with legal requirements for the repurchase. The failure of the vendor a retro to exercise the right to repurchase within the agreed time vests upon the vendee a retro, by operation of law, absolute title over the property.52One repurchases only what one has previously sold. The right to repurchase presupposes a valid contract of sale between the same parties.53By insisting that he had repurchased the property, respondent thereby admitted that the deed of absolute sale executed by him and petitioner on April 13, 1982 was, in fact and in law, a deed of absolute sale and not an equitable mortgage; hence, he had acquired ownership over the property based on said deed. Respondent is, thus, estopped from asserting that the contract under the deed of absolute sale is an equitable mortgage unless there is allegation and evidence of palpable mistake on the part of respondent;54or a fraud on the part of petitioner. Respondent made no such allegation in his pleadings and affidavit. On the contrary, he maintained that petitioner had sold the property to him in July 1985 and acknowledged receipt of the purchase price thereof except the amount ofP39,000.00 retained by Perlita Ventura. Respondent is thus bound by his admission of petitioners ownership of the property and is barred from claiming otherwise.55Respondents admission that petitioner acquired ownership over the property under the April 13, 1982 deed of absolute sale is buttressed by his admission in the Contract of Lease dated April 15, 1982 that petitioner was the owner of the property, and that he had paid the rentals for the duration of the contract of lease and even until 1985 upon its extension. Respondent was obliged to prove his defense that petitioner had given him the right to repurchase, and that petitioner obliged herself to resell the property forP250,000.00 when they executed the April 13, 1982 deed of absolute sale.We have carefully reviewed the case and find that respondent failed to adduce competent and credible evidence to prove his claim.As gleaned from the April 13, 1982 deed, the right of respondent to repurchase the property is not incorporated therein. The contract is one of absolute sale and not one with right to repurchase. The law states that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control.56When the language of the contract is explicit, leaving no doubt as to the intention of the drafters, the courts may not read into it any other intention that would contradict its plain import.57The clear terms of the contract should never be the subject matter of interpretation. Neither abstract justice nor the rule of liberal interpretation justifies the creation of a contract for the parties which they did not make themselves, or the imposition upon one party to a contract or obligation to assume simply or merely to avoid seeming hardships.58Their true meaning must be enforced, as it is to be presumed that the contracting parties know their scope and effects.59As the Court held in Villarica, et al. v. Court of Appeals:60The right of repurchase is not a right granted the vendor by the vendee in a subsequent instrument, but is a right reserved by the vendor in the same instrument of sale as one of the stipulations of the contract. Once the instrument of absolute sale is executed, the vendor can no longer reserve the right to repurchase, and any right thereafter granted the vendor by the vendee in a separate instrument cannot be a right of repurchase but some other right like the option to buy in the instant case.61In Ramos v. Icasiano,62we also held that an agreement to repurchase becomes a promise to sell when made after the sale because when the sale is made without such agreement the purchaser acquires the thing sold absolutely; and, if he afterwards grants the vendor the right to repurchase, it is a new contract entered into by the purchaser as absolute owner. An option to buy or a promise to sell is different and distinct from the right of repurchase that must be reserved by means of stipulations to that effect in the contract of sale.63There is no evidence on record that, on or before July 1985, petitioner agreed to sell her property to the respondent forP250,000.00. Neither is there any documentary evidence showing that Ventura was authorized to offer for sale or sell the property for and in behalf of petitioner forP250,000.00, or to receive the said amount from respondent as purchase price of the property. The rule is that when a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void64and cannot produce any legal effect as to transfer the property from its lawful owner.65Being inexistent and void from the very beginning, said contract cannot be ratified.66Any contract entered into by Ventura for and in behalf of petitioner relative to the sale of the property is void and cannot be ratified by the latter. A void contract produces no effect either against or in favor of anyone.67Respondent also failed to prove that the negotiations between him and petitioner has culminated in his offer to buy the property forP250,000.00, and that they later on agreed to the sale of the property for the same amount. He likewise failed to prove that he purchased and reacquired the property in July 1985. The evidence on record shows that petitioner had offered to sell the property for US$15,000 on a "take it or leave it" basis in May 1984 upon the expiration of the Contract of Lease68an offer that was rejected by respondentwhich is why on December 30, 1997, petitioner and her husband offered again to sell the property to respondent forP670,000.00 inclusive of back rentals and the purchase price of the property under the April 13, 1982 Deed of absolute Sale.69The offer was again rejected by respondent. The final offer appears to have been made on January 11, 199870but again, like the previous negotiations, no contract was perfected between the parties.A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.71Under Article 1318 of the New Civil Code, there is no contract unless the following requisites concur:(1) Consent of the contracting parties;(2) Object certain which is the subject matter of the contract;(3) Cause of the obligation which is established.Contracts are perfected by mere consent manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.72Once perfected, they bind the contracting parties and the obligations arising therefrom have the form of law between the parties which must be complied with in good faith. The parties are bound not only to the fulfillment of what has been expressly stipulated but also to the consequences which, according to their nature, may be in keeping with good faith, usage and law.73There was no contract of sale entered into by the parties based on the Receipts dated July 1985 and June 16, 1986, signed by Perlita Ventura and the letter of petitioner to respondent dated July 25, 1986.By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and deliver a determinate thing and the other, to pay therefor a price certain in money or its equivalent.74The absence of any of the essential elements will negate the existence of a perfected contract of sale. As the Court ruled in Boston Bank of the Philippines v. Manalo:75A definite agreement as to the price is an essential element of a binding agreement to sell personal or real property because it seriously affects the rights and obligations of the parties. Price is an essential element in the formation of a binding and enforceable contract of sale. The fixing of the price can never be left to the decision of one of the contracting parties. But a price fixed by one of the contracting parties, if accepted by the other, gives rise to a perfected sale.76A contract of sale is consensual in nature and is perfected upon mere meeting of the minds. When there is merely an offer by one party without acceptance of the other, there is no contract.77When the contract of sale is not perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation between the parties.78Respondents reliance on petitioners letter to him dated July 25, 1986 is misplaced. The letter reads in full:7-25-86Dear Martin & Ising,Enclosed for your information is the letter written by my husband to Perlita. I hope that you will be able to convince your cousin that its to her best interest to deposit the balance of your payment to me ofP39,000.00 in my bank acct. per our agreement and send me my bank book right away so that we can transfer the title of the property.Regards,Amie79We have carefully considered the letter of Perlita Ventura, dated July 18, 1986, and the letter of Eugene Roberts, dated July 25, 1986, where Ventura admitted having used the money of petitioner amounting toP39,000.00 without the latters knowledge for the plane fare of Venturas parents. Ventura promised to refund the amount ofP39,000.00, inclusive of interests, within one year.80Eugene Roberts berated Ventura and called her a thief for stealing his and petitioners money and that of respondents wife, Ising, who allegedly told petitioner that she, Ising, loaned the money to her parents for their plane fare to the USA. Neither Ventura nor Eugene Roberts declared in their letters that Ventura had used theP250,000.00 which respondent gave to her.Petitioner in her letter to respondent did not admit, either expressly or impliedly, having receivedP211,000.00 from Ventura. Moreover, in her letter to petitioner, only a week earlier, or on July 18, 1986, Ventura admitted having spent theP39,000.00 and pleaded that she be allowed to refund the amount within one (1) year, including interests.Naririto ang total ng pera mo sa bankbook mo,P55,000.00 pati na yong deposit na sarili mo at bale ang nagalaw ko diyan ayP39,000.00. Huwag kang mag-alala ibabalik ko rin sa iyo sa loob ng isang taon pati interest.Ate Per811awphi1.netIt is incredible that Ventura was able to remit to petitionerP211,000.00 before July 25, 1986 when only a week earlier, she was pleading to petitioner for a period of one year within which to refund theP39,000.00 to petitioner.It would have bolstered his cause if respondent had submitted an affidavit of Ventura stating that she had remittedP211,000.00 out of theP250,000.00 she received from respondent in July 1985 and June 20, 1986.IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. CV No. 69034 is REVERSED and SET ASIDE. The Decision of the Metropolitan Trial Court, affirmed with modification by the Regional Trial Court, is AFFIRMED.SO ORDERED.

G.R. No. 152199 June 23, 2005LUIS S. MISTERIO, GABRIEL S. MISTERIO, FRANCIS S. MISTERIO, THELMA S. MISTERIO and ESTELLA S. MISTERIO-TAGIMACRUZ,petitioners,vs.CEBU STATE COLLEGE OF SCIENCE AND TECHNOLOGY (CSCST), duly represented by its President, DR. JOSE SAL TAN,respondent.D E C I S I O NCALLEJO, SR.,J.:This is a petition for review oncertiorarito annul the Decision1dated July 31, 2000 of the Court of Appeals (CA) in CA-G.R. CV No. 53592, as well as its Resolution2denying the motion for reconsideration. The CA reversed and set aside the Decision3of the Regional Trial Court (RTC) of Cebu City, Branch 18, in Civil Case No. CEB-15267.The AntecedentsSudlon Agricultural High School (SAHS) was established in Cebu Province on August 2, 1948. The administrative and supervisory control of the school was handled by the Division of Schools of the same province. The original site of the school was in Sudlon, about 33 kilometers from Cebu Cityviathe Tabunak-Talisay Highway.In 1952, the Provincial Board of Cebu granted the usufruct of 41 parcels of land, covering 104.5441 hectares of the Banilad Friar Lands Estate to the SAHS. Pursuant to Republic Act No. 948, SAHS was nationalized on June 20, 1953.On December 31, 1956, Asuncion Sadaya-Misterio executed a Deed of Sale of a parcel of land denominated asLot No. 1064of the Banilad Friar Lands Estate, in favor of the SAHS. The property had an area of 4,563 square meters and was situated at Lahug, Cebu City, covered by Transfer Certificate of Title (TCT) No. 13086 of the Registry of Deeds of the province of Cebu. The sale was subject to the right of the vendor to repurchase the property after the high school shall have ceased to exist, or shall have transferred its site elsewhere.Consequently, on May 22, 1957, TCT No. 13086 was cancelled and in lieu thereof, TCT No. 15959 was issued by the Registry of Deeds of Cebu City in the name of SAHS.4The right of the vendor to repurchase the property was annotated at the dorsal portion thereof.On March 18, 1960, the Provincial Board of Cebu, through Resolution No. 491, donated the aforementioned 41 lots to SAHS, subject to two (2) conditions: (1) that if the SAHS ceases to operate, the ownership of the lots would automatically revert to the province, and (2) that the SAHS could not alienate, lease or encumber the properties.On June 10, 1983, Batas Pambansa (B.P.) Blg. 412, entitled "An Act Converting the Cebu School of Arts and Trades in Cebu City into a Chartered College to be Known as the Cebu State College of Science and Technology, Expanding its Jurisdiction and Curricular Programs" took effect. The law incorporated and consolidated as one school system certain vocational schools in the province of Cebu, including the SAHS, and which became an extension of the Cebu State College of Science and Technology (CSCST).In the meantime, the province of Cebu decided to recover the 41 lots it had earlier donated to SAHS on the ground that the said deed was void. The province of Cebu opined that based on the initial report of its provincial attorney, the SAHS had no personality to accept the donation.In the meantime, Asuncion died intestate. When her heirs learned that the province of Cebu was trying to recover the property it had earlier donated to SAHS, they went to the province of Cebu on August 19, 1998, informing it of their intention to exercise their right to repurchase the property as stipulated in the aforecited deed of sale executed by their predecessor-in-interest.On February 1, 1989, the province of Cebu (represented by then Governor Emilio M. R. Osmea), and the CSCST (represented by then DECS Secretary Lourdes R. Quisumbing), entered into a Memorandum of Agreement over the 40 parcels of land, allocating 53 hectares to the province of Cebu, and 51 hectares for the SAHS. The agreement was ratified by theSangguniang Panlalawiganand the SAHS Board of Trustees.In a Letter5dated March 13, 1990, the heirs of the late Asuncion Sadaya-Misterio, through their counsel, Atty. Ricardo G. Padilla, informed CSCST of the heirs intention to exercise the option to repurchase Lot No. 1064 granted to them under the deed of sale, as the SAHS had ceased to exist.In response thereto, Jesus T. Bonilla, as Vocational School Superintendent II of CSCST, wrote Atty. Padilla on March 29, 1990, informing the latter that the SAHS still existed and "[i]n fact, from a purely secondary school it is now offering collegiate courses." He explained that "what has been changed is only the name of the school [to CSCST] which does not imply the loss of its existence."6On December 23, 1993, Luis, Gabriel, Francis, Thelma, all surnamed Misterio, and Estella S. Misterio-Tagimacruz, the legitimate heirs of the late Asuncion Sadaya-Misterio and herein petitioners, filed a Complaint7before the RTC of Cebu City, Branch 18, for "Nullity of Sale and/or Redemption." Named party-defendants were the CSCST, Armand Fabella as CSCST Chairman, and Dr. Mussolini C. Barillo as CSCST President, herein respondents. Docketed as Civil Case No. 66-15267, the complaint alleged in part as follows:FIRST CAUSE OF ACTION12. Sudlon Agricultural High School at the time of the execution of the contract of sale with the late Asuncion Sadaya sometime on December 31, 1956 had no juridical personality of its (sic) own. Hence, it cannot acquire and possess any property, including the parcel of land subject of this action.13. The Contract of Sale executed was, therefore, null and void and therefore non-existent. Thus, the land subject of the sale should be reconveyed to the legitimate heirs of Asuncion Sadaya.SECOND CAUSE OF ACTION14. On June 10, 1983, Batas Pambansa Blg. 412 was enacted, abolishing the then Sudlon Agricultural College and converting it to become part of the Cebu State College for Science and Technology (CSCST).15. The said law also transferred all the personnel, properties, including buildings, sites, and improvements, records, obligations, monies and appropriation of Sudlon to the CSCST.16. The abolition of Sudhon and its (sic) merger or consolidation as part of CSCST had rendered operative the condition in the Deed of Sale granting the vendor and her heirs, Asuncion Sadaya, the right to redeem Lot No. 1064.17. By the legislative act of merging or consolidating Sudlon Agricultural College with other colleges, the separate existence of the constituent schools including Sudlon Agricultural College has ceased to exist as a legal consequence of merger or consolidation.18. CSCST, as transferee of the land subject of sale, is the actual possessor of the land and is the proper party-defendant for redemption.8The petitioners prayed that, after due proceeding, judgment be rendered in their favor, thus WHEREFORE, the foregoing premises considered, it is most respectfully prayed of this Honorable Court to render a decision in favor of the plaintiffs to the following effect:1. Declare the Contract of Sale between the late Asuncion Sadaya and Sudlon Agricultural High School as null and void for the latter has no legal personality and cannot own a real property.As a consequence, to order the actual possessor of the land CSCST to deliver and reconvey the land to plaintiffs and the latter is willing to return the money received.2. In the alternative, declare that Sudlon Agricultural High School has ceased to exist and allow the plaintiffs to redeem Lot 1064 in the amount stipulated in the contract.3. Other reliefs just and equitable under the premises are prayed for.9In their answer to the complaint, the respondents alleged that:11. Complainants in their complaint failed to state sufficient cause of action which may be considered enough ground to dismiss this instant case;12. The complainants are estopped from contesting the juridical capacity of Sudlon to own or acquire this property which is the subject of this case, after a long period of silence or inaction from the transfer of the title in favor of Sudlon Agricultural School;13. The contract of sale having been mutually and freely entered into by the parties is valid and binding between the vendor and the vendee, including their successors-in-interest; hence, reconveyance is not proper;14. The enactment of B.P. 412, which is the Charter of the College has not caused the abolition of Sudlon Agricultural School. In fact, the school has now grown into a higher status, because it has now admitted collegiate students, in addition to its secondary students;15. The instruction of the Sudlon Agricultural School is actually carried out right on the same site which complainants claim have ceased to exist not the site of the school transferred somewhere else. Therefore, the conditions in the deed of sale have not rendered operative the right of the vendor to exercise the same.10After the preliminary conference on May 23, 1994, the trial court issued a pre-trial order defining the issues as follows: (1) whether Sudlon Agricultural School has still retained its personality as such school or it had ceased to exist, and (2) whether the plaintiffs have the right to exercise the right of redemption over the property.Upon the order of the RTC, the Clerk of Court conducted an ocular inspection on Lot No. 1064. The court-appointed commissioner submitted his report11on June 10, 1994.On November 29, 1995, the RTC rendered judgment, the dispositive portion of which reads:WHEREFORE, in view of all the foregoing considerations, JUDGMENT is hereby rendered in favor of the plaintiffs and against the defendants declaring the Deed of Sale entered into by and between Asuncion Sadaya and Sudlon Agricultural High School as null and void for the latters lack of juridical personality to acquire real property or to enter into such transaction or having ceased to exist and ordering the Cebu State College of Science and Technology being the actual possessor of the land, Lot 1064, to deliver and reconvey the same to plaintiffs upon payment of the aforementioned purchased price.No pronouncement as to costs.SO ORDERED.12The RTC ruled that the donation was voidab initioas the SAHS, in the first place, did not have the personality to be a donee of real property. Moreover, with the enactment of B.P. Blg. 412, the SAHS ceased to exist and to operate as such. The RTC declared that, under the Corporation Code, the constituent corporations (SAHS and CSCST) became one through the merger or consolidation, with CSCST as the surviving entity. Whether Lot No. 1064 was still being used for school purposes was of no moment, and to "say that [SAHS] still exists but is now forming part of CSCST is stretching the interpretation of the contract too far." It concluded that no prescription lay as against an inexistent contract.The CSCST, through the Office of Solicitor General (OSG), appealed the decision to the CA, and outlined the following assignment of errors:ITHE TRIAL COURT ERRED IN NOT STICKING TO THE ISSUES DEFINED BY THE PARTIES DURING PRE-TRIAL.IITHE TRIAL COURT ERRED IN NOT HOLDING THAT APPELLEES ARE ESTOPPED FROM QUESTIONING THE PERSONALITY OF THE SUDLON AGRICULTURAL HIGH SCHOOL.IIITHE TRIAL COURT ERRED IN GIVING WEIGHT TO INADMISSIBLE AND SELF-SERVING EVIDENCE.IVTHE TRIAL COURT ERRED IN NOT HOLDING THAT APPELLEES ACTION IS BARRED BY PRESCRIPTION.VTHE TRIAL COURT ERRED IN NOT HOLDING THAT THE DEED OF SALE IS A CONSENSUAL CONTRACT FREELY ENTERED INTO BY THE PARTIES AND NOT A CONTRACT OF ADHESION.VITHE TRIAL COURT ERRED IN NOT HOLDING THAT THE DEED OF SALE IS NOT AMBIGUOUS.VIITHE TRIAL COURT ERRED IN NOT HOLDING THAT THE LOT SUBJECT OF THE SALE IS STILL BEING USED FOR SCHOOL PURPOSES AS ORIGINALLY INTENDED BY THE PARTIES.VIIITHE TRIAL COURT ERRED IN NOT HOLDING THAT B.P. [BLG.] 412 DID NOT DISSOLVE OR EXTINGUISH SUDLON AGRICULTURAL HIGH SCHOOL BUT MERELY SUBJECTED THE SAME TO THE SUPERVISION AND ADMINISTRATION OF CSCST.IXTHE TRIAL COURT ERRED IN NOT HOLDING THAT THE SUDLON AGRICULTURAL HIGH SCHOOL AND/OR CSCST IS/ARE NOT CORPORATIONS GOVERNED BY THE COPORATION CODE.On October 3, 1997, the CSCST and the province of Cebu executed a Deed for Reversion, in which the CSCST deeded to the province of Cebu the property covered by TCT No. 15959. Based on the said deed, TCT No. 146351 was issued by the Register of Deeds on November 12, 1997 in the name of the province of Cebu.13Annotated at the dorsal portion thereof was the notice of the pending cases before the RTC and the CA.On July 31, 2000, the CA rendered its decision reversing the RTCs decision. Thefalloof the decision reads:WHEREFORE, the appealed decision is REVERSED and SET ASIDE, and a new one issued, DISMISSING the instant complaint for lack of merit.SO ORDERED.14The appellate court held that the lower court should have confined itself to the issues defined by the parties during pre-trial, namely, (1) whether Sudlon Agricultural School still retained its personality as such school or was still in existence; and (2) whether the petitioners had the right to exercise the right to repurchase the property. The CA declared that the trial of the case should have been limited to these two issues.While it affirmed the RTC ruling that the SAHS had ceased to exist when B.P. Blg. 412 took effect, the appellate court ruled that the period for the petitioners to repurchase the property expired on June 1987, four years after the enactment of B.P. Blg. 412. It held that the period within which the property was to be repurchased must be restrictively applied in order to settle ownership and title at the soonest possible time, and not to leave such title to the subject property uncertain.The petitioners filed a motion for the reconsideration of the decision, which the CA denied in a Resolution dated January 25, 2002.The petitioners filed the present petition for review oncertiorari, contending that the CA erred in (a) resolving the appeal of the respondents based on prescription, although the issue was never raised during the trial; and (b) resolving that their action had already prescribed.The petition is without merit.The petitioners fault the CA for holding that their right to repurchase Lot No. 1064 had long since prescribed. Citing Article 1606(3) of the New Civil Code, they argue that "[p]rescription should start to run from the time it is legally feasible for the party to redeem the land, which is the time when the action to redeem has accrued." The petitioners argue that this is so since the issue of whether the SAHS had ceased to exist had still yet to be resolved. The petitioners posit that unless and until judgment would be rendered stating that the SAHS has ceased to exist, the period to repurchase the property would not start to run. It is only from the finality of the said judgment that the right to repurchase the property may be exercised; hence, they still had thirty (30) days from the date of the promulgation of the CA decision within which to repurchase the property. The petitioners further aver that since the lien, their right to repurchase the property, was annotated on the title of the land, the right to exercise the same is imprescriptible. They argue that they had been vigilant of their right to repurchase the property, as far back as 1973. In fact, they made tender of payment in March 1990, well within the ten-year prescriptive period. They point out that the CSCST had abandoned its defense of prescription by contending that the condition for repurchase had not yet become operational.The OSG, for its part, contends that the petitioners reliance on Article 1606(3) of the New Civil Code is misplaced, because the law applies only to sales where the right to repurchase is not expressly agreed upon by the parties. Here, the right to repurchase is unquestionable. The OSG, likewise, argues that the annotation of the right of redemption has no bearing on the issue of prescription. It posits that the "Torrens System has absolutely nothing to do with the period of prescription of ones right to repurchase, as in the instant case." The OSG concludes that whatever right the petitioners had on the property had already prescribed by the mere lapse of time, by reason of negligence.1avvphi1.netCentral to the issue is the following provision in the deed of sale executed by Asuncion Sadaya-Misterio in favor of the SAHS:That the Vendee herein, the SUDLON AGRICULTURAL HIGH SCHOOL, hereby obligates itself to use the aforementioned Lot No. 1064 for school purposes only, and it is a condition attached to this contract that the aforementioned vendee obligates itself to give the Vendor herein, the right to repurchase the said lot by paying to the Vendee herein the aforementioned consideration ofP9,130.00 only, after the aforementioned SUDLON AGRICULTURAL HIGH SCHOOL shall ceased (sic) to exist or shall have transferred its school site elsewhere.15The essence of apacto de retrosale is that title and ownership of the property sold is immediately rested in the vendeea retro, subject to the restrictive condition of repurchase by the vendora retrowithin the period provided in Article 1606 of the New Civil Code, to wit:Art. 1606. The right referred to in Article 1601, in the absence of an express agreement, shall last four years from the date of the contract.Should there be an agreement, the period cannot exceed ten years.lawphil.netHowever, the vendor may still exercise the right to repurchase within thirty days from the time final judgment was rendered in a civil action on the basis that the contract was a true sale with right to repurchase.The failure of the vendeea retroto repurchase the property vests upon the latter by operation of law the absolute title and ownership over the property sold.16Pending the repurchase of the property, the vendeea retromay alienate, mortgage or encumber the same, but such alienation or encumbrance is as revocable as is his right. If the vendora retrorepurchases the property, the right of the vendeea retrois resolved, because he has to return the property free from all damages and encumbrances imposed by him.17The vendora retromay also register his right to repurchase under the Land Registration Act and may be enforced against any person deriving title from the vendeea retro.18In this case, the vendora retroand the vendeea retrodid not agree on any period for the exercise of the right to repurchase the property. Hence, the vendora retromay extend the said right within four days from the happening of the allocated condition contained in the deed: (a) the cessation of the existence of the SAHS, or (b) the transfer of the school to other site.We note that, as gleaned from the petitioners complaint before the trial court, they alleged that the SAHS ceased to exist on June 10, 1983, when B.P. Blg. 412 took effect, abolishing therein the SAHS which, in the meantime, had been converted into the Sudlon Agricultural College. The CA found the position of the petitioners to be correct, and declared that conformably to the condition in the deed of sale, and under Article 1606 of the New Civil Code, the right of the petitioners as successors-in-interest of the vendeea retrocommenced to run on June 10, 1983. Hence, they had until June 10, 1987 within which to repurchase the property; however, they failed to do so.It is true that respondent CSCST, through counsel, was of the view that despite the effectivity of B.P. Blg. 412, the structure and facilities of the SAHS remained in the property and, as such, it cannot be said that the said school had ceased to exist. It argued that the phrase "SAHS ceased to exist" in the deed meant that the structure and facilities of the school would be destroyed or dismantled, and had no relation whatsoever to the abolition of the school and its integration into the Cebu State College for Science and Technology. However, the CA rejected the position of the respondent CSCST, as well as that of the OSG, and affirmed that of the petitioners.The four-year period for the petitioners to repurchase the property was not suspended merely and solely because there was a divergence of opinion between the petitioners, on the one hand, and the respondent, on the other, as to the precise meaning of the phrase "after the SAHS shall cease to exist" in the deed of sale. The existence of the petitioners right to repurchase the property was not dependent upon the prior final interpretation by the court of the said phrase. Indeed, the petitioners specifically alleged in the complaint that:FIRST CAUSE OF ACTION12. Sudlon Agricultural High School at the time of the execution of the contract of sale with the late Asuncion Sadaya sometime on December 31, 1956 had no juridical personality of its own. Hence, it cannot acquire and possess any property, including the parcel of land subject of this action.13. The Contract of Sale executed was therefore null and void and therefore non-existent. Thus, the land subject of sale should be reconveyed to the legitimate heirs of Asuncion Sadaya.SECOND CAUSE OF ACTION14. On June 10, 1983, Batas Pambansa Blg. 412 was enacted abolishing the then Sudlon Agricultural College and converting it to become part of the Cebu State College for Science and Technology (CSCST).15. The said law also transferred all the personnel, properties, including buildings, sites, and improvements, records, obligations, monies and appropriations of Sudlon to the CSCST.16. The abolition of Sudlon and its merger or consolidation as part of CSCST had rendered operative the condition in the Deed of Sale granting the vendor and her heirs, Asuncion Sadaya, the right to redeem Lot No. 1064.17. By the legislative act of merging or consolidating Sudlon Agricultural College with other colleges, the separate existence of the constituent schools including Sudlon Agricultural College has ceased to exist as a legal consequence of merger or consolidation.18. CSCST, as transferee of the land subject of sale, is the actual possessor of the land and is the proper party defendant for redemption.19The petitioners are estopped from changing on appeal their theory of the case in the trial court and in the CA.20We agree with the contention of the OSG that the annotation of the petitioners right to repurchase the property at the dorsal side of TCT No. 15959 has no relation whatsoever to the issue as to when such right had prescribed. The annotation was only for the purpose of notifying third parties of the petitioners right to repurchase the property under the terms of the deed of sale, and the law.IN LIGHT OF ALL THE FOREGOING, the petition is DENIED DUE COURSE. Costs against the petitioners.SO ORDERED.

G.R. No. 117501 July 8, 1997SOLID HOMES, INC.,petitioner,vs.HON. COURT OF APPEALS, STATE FINANCING CENTER, INC., and REGISTER OF DEEDS FOR RIZAL,respondents.PANGANIBAN,J.:Is the failure to annotate the vendora retro'sright of repurchase in the certificates of title of the real estate properties subject ofdacion en pagoconclusive evidence of the vendeea retro'smalice and bad faith, entitling the former to damages? In a sale withpacto de retro, is the repurchase price limited by Article 1616 of the Civil Code?These are the basic questions raised in this petition for review oncertiorariunder Rule 45 of the Rules of Court assailing the Court of Appeals1Decision2promulgated on April 25, 1994 and Resolution3of September 26, 1994 in CA-G.R. CV No. 39154, affirming the decision4of the Regional Trial Court of Pasig, Branch 157 in Civil Case No. 51214. The said RTC decision sustained the validity of the subjectdacion en pagoagreement and declared the same as "a true sale with right of repurchase."The FactsThe facts of the case as narrated by the trial court and reproduced in the assailed Decision of the Court of Appeals are undisputed by the parties. These are the relevant portions:It appears that on June 4, 1979, Solid Homes executed in favor of State Financing (Center, Inc.) a Real Estate Mortgage (Exhibit "3") on its properties embraced in Transfer Certificate of Title No. 9633 (Exhibit "9") and Transfer Certificate of Title No. (492194) 11938 (Exhibit "8") of the Registry of Deeds in Pasig, Metro Manila, in order to secure the payment of a loan of P10,000,000.00 which the former obtained from the latter. A year after, Solid Homes applied for and was granted an additional loan of P1,511,270.03 by State Financing, and to secure its payment, Solid Homes executed the Amendment to Real Estate Mortgage dated June 4, 1980 (Exhibit "4") whereby the credits secured by the first mortgage on the abovementioned properties were increased from P10,000,000.00 to P11,511,270.03. Sometime thereafter, Solid Homes obtained additional credits and financing facilities from State Financing in the sum of P1,499,811,97, and to secure its payment, Solid Homes executed in favor of State Financing the Amendment to Real Estate Mortgage dated March 5, 1982 (Exhibit "5") whereby the mortgage executed on its properties on June 4, 1979 was again amended so that the loans or credits secured thereby were further increased from P11,511,270.03 to P13,011,082.00.When the loan obligations abovementioned became due and payable, State Financing made repeated demands upon Solid Homes for the payment thereof, but the latter failed to do so. So, on December 16, 1982, State Financing filed a petition for extrajudicial foreclosure of the mortgages abovementioned with the Provincial Sheriff of Rizal, who, in pursuance of the petition, issued a Notice of Sheriff's Sale dated February 4, 1983 (Exhibit "6"), whereby the mortgaged properties of Solid Homes and the improvements existing thereon, including the V.V. Soliven Towers II Building, were set for public auction sale on March 7, 1983 in order to satisfy the full amount of Solid Homes' mortgage indebtedness, the interest thereon, and the fees and expenses incidental to the foreclosure proceedings.Before the scheduled public auction sale . . . , the mortgagor Solid Homes made representations and induced State Financing to forego with the foreclosure of the real estate mortgages referred to above. By reason thereof, State Financing agreed to suspend the foreclosure of the mortgaged properties, subject to the terms and conditions they agreed upon, and in pursuance of their said agreement, they executed a document entitledMEMORANDUM OF AGREEMENT/DACION EN PAGO("Memorandum") dated February 28, 1983 (Exhibits "C" and "7") . . . . Among the terms and conditions that said parties agreed upon were . . . :1. (Solid Homes) acknowledges that it has an outstanding obligation due and payable to (State Financing) and binds and obligates to pay (State Financing) the totality of its outstanding obligation in the amount of P14,225,178.40, within one hundred eighty (180) days from date of signing of this instrument. However, it is understood and agreed that the principal obligation of P14,225,178.40 shall earn interest at the rate of 14%per annumand penalty of 16%per annumcounted from March 01, 1983 until fully paid.2. The parties agree that should (Solid Homes) be able to pay (State Financing) an amount equivalent to sixtyper centum(60%) of the principal obligation, or the amount of P8,535,107.04, within the first one hundred eighty (180) days, (State Financing) shall allow the remaining obligation of (Solid Homes) to be restructured at a rate of interest to be mutually agreed between the parties.3. It is hereby understood and agreed that in the event (Solid Homes) fails to comply with the provisions of the preceding paragraphs, within the said period of one hundred eighty (180) days, this document shall automatically operate to be an instrument of dacion en pago without the need of executing any document to such an effect and (Solid Homes) hereby obligates and binds itself to transfer, convey and assign to (State Financing), by way of dacion en pago, its heirs, successors and assigns, and (State Financing) does hereby accept the conveyance and transfer of the above-described real properties, including all the improvements thereon, free from all liens and encumbrances, in full payment of the outstanding indebtedness of (Solid Homes) to (State Financing) . . . .xxx xxx xxx6. (State Financing) hereby grants (Solid Homes) the right to repurchase the aforesaid real properties, including the condominium units and other improvements thereon, within ten (10) months counted from and after the one hundred eighty (180) days from date of signing hereof at an agreed price of P14,225,178.40, or as reduced pursuant to par. 5 (d), plus all cost of money equivalent to 30%per annum, registration fees, real estate and documentary stamp taxes and other incidental expenses incurred by (State Financing) in the transfer and registration of its ownership via dacion en pago . . . .xxx xxx xxxSubsequently, Solid Homes failed to pay State Financing an amount equivalent to 60% (or P8,535,107.04) of the principal obligation of P14,225,178.40 within 180 days from the signing of the (Memorandum) on February 28, 1983, as provided under paragraph 2 of the said document. Hence, and in pursuance of paragraph 3 thereof which provided that "this document shall automatically operate to be an instrument of dacion en pago without the need of executing any document to such an effect . . . (,)" State Financing registered the said (Memorandum) with the Register of Deeds in Pasig, Metro Manila on September 15, 1983. Consequently, the said Register of Deeds cancelled TCT No. 9633 and TCT No. (492194) 11938 in the name of Solid Homes which were the subject matter of the (Memorandum) abovementioned, and in lieu thereof, the said office issued Transfer Certificate of Title No. 40534 (Exhibits "J" and "11") and Transfer Certificate of Title No. 40534 (Exhibits "K" and "12") in the name of State Financing . . . .In a letter dated October 11, 1983 (Exhibit "16"), State Financing informed Solid Homes of the transfer in its name of the titles to all the properties subject matter of the (Memorandum) and demanded among other things, the Solid Homes turn over to State Financing the possession of the V.V. Soliven Towers II Building erected on two of the said properties. Solid Homes replied with a letter dated October 14, 1983, (Exhibit "20") asking for a period of ten (10) days within which to categorize its position on the matter; and in a subsequent letter dated October 24, 1983, Solid Homes made known to State Financing its position that the (Memorandum) is null and void because the essence thereof is that State Financing, as mortgagee creditor, would be able to appropriate unto itself the properties mortgaged by Solid Homes which is in contravention of Article 2088 of the Civil Code. State Financing then sent to Solid Homes another letter dated November 3, 1983 (Exhibit "17"), whereby it pointed out that Art. 2088 of the Civil Code is not applicable to the (Memorandum) they have executed, and also reiterated its previous demand that Solid Homes turn over to it the possession of the V.V. Soliven Towers II Building within five (5) days, but Solid Homes did not comply with the said demand.. . . and within that period of repurchase, Solid Homes wrote to State Financing a letter dated April 30, 1984 containing its proposal for repayment schemes under terms and conditions indicated therein for the repurchase of the properties referred to. In reply to said letter, State Financing sent a letter dated May 17, 1984 (Exhibit "18") advising Solid Homes that State Financing's management was not amenable to its proposal, and that by way of granting it some concessions, said management made a counter-proposal requiring Solid Homes to make an initial payment of P10 million until 22 May 1984 and the balance payable within the remaining period to repurchase the properties as provided for under the (Memorandum) . . . . Thereafter, a number of conferences were held among the corporate officers of both companies wherein they discussed the payment arrangement of Solid Home's outstanding obligation, . . . . In a letter dated June 7, 1984 (Exhibit "19"), State Financing reiterated the counter-proposal in its previous letter dated May 17, 1984 to Solid Homes as a way of making good its account, and at the same time reminded Solid Homes that it has until 27 June 1984 to exercise its right to repurchase the properties pursuant to the terms and conditions of the (Memorandum), otherwise, it will have to vacate and turn over the possession of said properties to State Financing. In return, Solid Homes sent to State Financing a letter dated June 18, 1984 (Exhibits "N" and "22") containing a copy of the written offer made by C.L. Alma Jose & Sons, Inc. (Exhibits "M" and "22-A") to avail of Solid Homes' right to repurchase the V.V. Soliven Towers II pursuant to the terms of the Dacion En Pago. The letter also contained a request that the repurchase period under said Dacion En Pago which will expire on June 27, 1984 be extended by sixty (60) days to enable Solid Homes to comply with the conditions in the offer of Alma Jose & Sons, Inc. referred to, and thereafter, to avail of the one year period to pay the balance based on the verbal commitment of State Financing's President . . . .However, on June 26, 1984, a day before the expiry date of its right to repurchase the properties involved in the (Memorandum) on June 27, 1984, Solid Homes filed the present action against defendants State Financing and the Register of Deeds for Metro Manila District II (Pasig), seeking the annulment of said (Memorandum) and the consequent reinstatement of the mortgages over the same properties; . . .5As earlier stated, the trial court held that the Memorandum of Agreement/Dacion En Pagoexecuted by the parties was valid and binding, and that the registration of said instrument in the Register of Deeds was in accordance with law and the agreement of the parties. It disposed of the case thus:WHEREFORE, this Court hereby renders judgment, as follows:1. Declaring that the Memorandum of Agreement/Dacion En Pago entered into by and between plaintiff Solid Homes and defendant State Financing on February 28, 1983 is a valid and binding document which does not violate the prohibition againstpactum commisoriumunder Art. 2088 of the Civil Code;2. Declaring that the said Memorandum of Agreement/Dacion En Pago is a true sale with right of repurchase, and not an equitable mortgage;3. Declaring that the registration of the said Memorandum of Agreement/Dacion En Pago with the defendant Register of Deeds in Pasig, Metro Manila by defendant State Financing on September 15, 1983 is in accordance with law and the agreement of the parties in the said document; but the annotation of the said document by the said Register of Deeds on the certificates of title over the properties subject of the Memorandum of Agreement/Dacion En Pago without any mention of the right of repurchase and the period thereof, is improper, and said Register of Deeds' cancellation of the certificates of title in the name of Solid Homes over the properties referred to and issuance of new titles in lieu thereof in the name of State Financing during the period of repurchase and without any judicial order is in violation of Art. 1607 of the Civil Code, which renders said titles null and void;4. Ordering the defendant State Financing to surrender to the defendant Register of Deeds in Pasig, Metro Manila for the cancellation thereof, all the certificates of title issued in its name over the properties subject of the Memorandum of Agreement/Dacion En Pago, including those titles covering the fully paid condominium units and the substitute collateral submitted in exchange for said condominium units;5. Ordering the said defendant Register of Deeds to cancel all the titles in the name of State Financing referred to and to reinstate the former titles over the same properties in the name of Solid Homes, with the proper annotation thereon of the Memorandum of Agreement/Dacion En Pago together with the right of repurchase and the period thereof as provided in said document and to return the said reinstated former titles (owner's copies) in the name of Solid Homes to State Financing;6. Ordering the defendant State Financing to release to plaintiff Solid Homes all the certificates of title over the fully paid condominium units in the name of Solid Homes, free from all liens and encumbrances by releasing the mortgage thereon;7. Granting the plaintiff Solid Homes the opportunity to exercise its right to repurchase the properties subject of the Memorandum of Agreement/Dacion En Pago within thirty (30) days from the finality of this Decision, by paying to defendant State Financing the agreed price of P14,225,178.40 plus all cost of money equivalent to 30% (interest of 14% and penalty of 16% from March 1, 1983)per annum, registration fees, real estate and documentary stamp taxes and other incidental expenses incurred by State Financing in the transfer and registration of its ownership via the Dacion En Pago, as provided in the said document and in pursuance of Articles 1606 and 1616 of the Civil Code; and8. Ordering the defendant Register of Deeds in Pasig, Metro Manila should plaintiff Solid Homes fail to exercise the abovementioned right to repurchase within 30 days from the finality of this judgment to record the consolidation of ownership in State Financing over the properties subject of the Memorandum of Agreement/Dacion En Pago in the Registry of Property, in pursuance of this Order, but excluding therefrom the fully paid condominium units and their corresponding titles to be released by State Financing.For lack of merit, the respective claims of both parties for damages, attorney's fees, expenses of litigation and costs of suit are hereby denied.6Both parties appealed from the trial court's decision. Solid Homes raised a lone question contesting the denial of its claim for damages. Such damages allegedly resulted from the bad faith and malice of State Financing in deliberately failing to annotate Solid Homes' right to repurchase the subject properties in the former's consolidated titles thereto. As a result of the non-annotation, Solid Homes claimed to have been prevented from generating funds from prospective buyers to enable it to comply with the Agreement and to redeem the subject properties.State Financing, on the other hand, assigned three errors against the RTC decision: (1) granting Solid Homes a period of thirty (30) days from finality of the judgment within which to exercise its right of repurchase; (2) ordering Solid Homes to pay only 30%per annumas interest and penalty on the principal obligation, rather than reasonable rental value from the time possession of the properties was illegally withheld from State Financing; and (3) failing to order the immediate turnover of the possession of the properties to State Financing as the purchasera retrofrom whom no repurchase has been made.As to the lone issue raised by Solid Homes, the Court of Appeals agreed with the trial court that the failure to annotate the right of repurchase of the vendora retrois not by itself an indication of bad faith or malice. State Financing was not legally bound to cause its annotation, and Solid Homes could have taken steps to protect its own interests. The evidence shows that after such registration and transfer of titles, State Financing willingly negotiated with Solid Homes to enable the latter to exercise its right to repurchase the subject properties,7an act that negates bad faith.Anent the first error assigned by State Financing, Respondent Court likewise upheld the trial court in applying Article 1606, paragraph 38of the Civil Code. Solid Homes was not in bad faith in filing the complaint for the declaration of nullity of the Memorandum of Agreement/Dacion En Pago. There is statutory basis for petitioner's claim that an equitable mortgage existed since it believed that (1) the price of P14 million was grossly inadequate, considering that the building alone was allegedly built at a cost of P60 million in 1979 and the lot was valued at P5,000.00 per square meter and (2) it remained in possession of the subject properties.9Furthermore, Article 160710of the Civil Code abolished automatic consolidation of ownership in the vendeea retroupon expiration of the redemption period by requiring the vendee to institute an action for consolidation where the vendora retromay be duly heard. If the vendee succeeds in proving that the transaction was indeed apacto de retro, the vendor is still given a period of thirty days from the finality of the judgment within which to repurchase the property.11Respondent Court also affirmed the trial court's imposition of the 30% interestper annumon top of the redemption price in accordance with paragraph 6 of the parties' Memorandum of Agreement.12However, Respondent Court of Appeals rules favorably on State Financing's last assigned error by ordering Solid Homes to deliver possession of the subject properties to the private respondent,citingjurisprudence that in a sale withpacto de retro, the vendee shall immediately acquire title over and possession of the real property sold, subject only to the vendor's right of redemption.13The full text of the dispositive portion of the assailed Decision is as follows:WHEREFORE, the judgment appealed from is affirmed with the modification that plaintiff Solid Homes is further ordered to deliver the possession of the subject property to State Financing.14The two opposing parties filed their respective motions for reconsideration of the assailed Decision. Both were denied by said Court for lack of merit. Both parties thereafter filed separate petitions for review before this Court. In a minute Resolution15dated December 5, 1994, this Court (Third Division) denied State Financing Center's petition because of its failure to show that a reversible error was committed by the appellate court. Its motion for reconsideration of said resolution was likewise denied for lack of merit. This case disposes only of the petition filed by Solid Homes, Inc.IssuesIn its petition, Solid Homes repeats its arguments before the Court of Appeals. It claims damages allegedly arising from the non-annotation of its right of repurchase in the consolidated titles issued to private respondent. Petitioner reiterates its attack against the inclusion of 30% interestper annumas part of the redemption price. It asserts that Article 1616 of the Civil Code authorizes only the return of the (1) price of the sale, (2) expenses of the contract and any other legitimate payments by reason of the sale and (3) necessary and useful expenses made on the thing sold. Considering that the transfer of titles was null and void, it was thus erroneous to charge petitioner the registration fees, documentary stamp taxes and other incidental expenses incurred by State Financing in the transfer and registration of the subject properties via thedacion en pago. Lastly, petitioner argues that there is no need for the immediate turnover of the properties to State Financing since the same was not stipulated under their Agreement, and the latter's rights were amply protected by the issuance of new certificates of title in its name.The Court's RulingFirst Issue: DamagesTo resolve the issue of damages, an examination of factual circumstances would be necessary, a task that is clearly beyond this Court's dominion. It is elementary that in petitions for review oncertiorari, only questions of law may be brought by the parties and passed upon by this Court. Findings of fact of lower courts are deemed conclusive and binding upon the Supreme Court except when the findings are grounded on speculation, surmises or conjectures; when the inference made is manifestly mistaken, absurd or impossible; when there is grave abuse of discretion in the appreciation of facts; when the factual findings of the trial and appellate courts are conflicting; when the Court of Appeals, in making its findings, has gone beyond the issues of the case and such findings are contrary to the admissions of both appellant and appellee;16when the judgment of the appellate court is premised on a misapprehension of facts or when it has failed to notice certain relevant facts which, if properly considered, will justify a different conclusion; when the findings of fact are conclusions without citation of specific evidence upon which they are based; and when findings of fact of the Court of Appeals are premised on the absence of evidence but are contradicted by the evidence on record.17The petitioner has not shown any and indeed the Court finds none of the above-mentioned exceptions to warrant a departure from the general rule.In fact, petitioner has not even bothered to support with evidence as claim for "actual, moral and punitive/nominal damages" as well as "exemplary damages and attorney's fees." It is basic that the claim for these damages must each be independently identified and justified; such claims cannot be dealt with in the aggregate, since they are neither kindred or analogous terms nor governed by a coincident set of rules.18The trial court found, and the Court of Appeals affirmed, that petitioner's claim for actual damages was baseless. Solid Homes utterly failed to prove that respondent corporation had maliciously and in bad faith caused the non-annotation of petitioner's right of repurchase so as to prevent the latter from exercising such right. On the contrary, it is admitted by both parties that State Financing informed petitioner of the registration with the Register of Deeds of Pasig of their Memorandum of Agreement/Dacion en Pagoand the issuance of new certificates of title in the name of the respondent corporation. Petitioner exchanged communications and held conferences with private respondent in order to draw a mutually acceptable payment arrangement for the former's repurchase of the subject properties. A written offer from another corporation alleging willingness to avail itself of petitioner's right of repurchase was even attached to one of these communications. Clearly, petitioner was not prejudiced by the non-annotation of such right in the certificates of titles issued in the name of State Financing. Besides, as the Court of Appeals noted, it was not the function of respondent corporation for cause said annotation. It was equally the responsibility of petitioner to protect its own rights by making sure that its right of repurchase was indeed annotated in the consolidated titles of private respondent.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 faith19on 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 consist of mere conjectures and speculations with no factual moorings. Furthermore, such transgression was addressed by the lower courts when they nullified the consolidated of ownership over the subject properties in the name of respondent corporation, because it had been effected in contravention of the provisions of Article 160720of the Civil Code. Such rulings are consistent with law and jurisprudence.Neither can moral damages be awarded to petitioner. Time and again, we have held that a corporation being an artificial person which has no feelings, emotions or senses, and which cannot experience physical suffering or mental anguish is not entitled to moral damages.21While the amount of exemplary damages need not be proved, petitioner must show that he is entitled to moral or actual damages;22but the converse obtains in the instant case. Award of attorney's fees is likewise not warranted when moral and exemplary damages are eliminated and entitlement thereto is not demonstrated by the claimant.23Lastly, "(n)ominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him."24As elaborated above and in the decisions of the two lower courts, no right of petitioner was violated or invaded by respondent corporation.Second Issue: Redemption PriceAnother fundamental principle of procedural law precludes higher courts from entertaining matters neither alleged in the pleadings nor raised during the proceedings below, but ventilated for the first time only in a motion for reconsideration or on appeal.25On appeal, only errors specifically assigned and properly argued in the brief will be considered, with the exception of those affecting jurisdiction over the subject matter as well as plain and clericalerrors.26As stated earlier, the single issue raised by petitioner in its appeal of the RTC decision to the Court of Appeals concerned only the denial of its claim for damages. Petitioner succinctly stated such issue in its brief as follows:I. LONE ASSIGNMENT OF ERRORThe trial court erred in that after having found that the registration of the Memorandum of Agreement/Dacion en Pago on September 15, 1983 [and the consequent cancellation of the titles of plaintiff-appellant Solid Homes, Inc. and issuance in lieu thereof of titles to defendant-appellant State Financing Center, Inc. (SFCI)] was null and void because of failure to duly annotate the right to repurchase granted to plaintiff-appellant Solid Homes, Inc. under par. 6 thereof still then subsisting up to