Aljem's Credit Investors Corporation vs. Spouses Bautista

Summary judgment is improper where the opposing party's defenses—such as equitable mortgage, pactum commissorium, and forgery—constitute genuine issues of fact requiring the presentation of evidence, even if the moving party characterizes them as purely legal issues or points to admissions in the pleadings.

Aljem's Credit Investors Corporation is a corporate lender that extended a loan to spouses Catalina and Porferio Bautista, secured by a mortgage over the spouses' parcel of land. After the spouses defaulted, petitioner foreclosed and consolidated title in its name. The spouses then sought to repurchase the property, leading to two successive Contracts to Sell. The dispute centers on whether petitioner was entitled to summary judgment in its action for accion publiciana, rescission of contract to sell, with damages and attorney's fees, or whether the spouses' defenses raised genuine factual issues necessitating trial.

Petitioner Aljem's Credit Investors Corporation extended a loan to spouses Catalina and Porferio Bautista, secured by a mortgage over a parcel of land owned by the spouses. The spouses failed to pay the loan, prompting petitioner to foreclose the mortgage. When the spouses did not redeem the property within the reglementary period, title was consolidated in petitioner's name.

As petitioner was about to take possession, Catalina offered to repurchase the property. Petitioner accepted, and the parties entered into a Contract to Sell on August 29, 2000. The spouses again failed to comply, resulting in the cancellation of that contract. A second Contract to Sell was executed on September 27, 2001, but despite several demands to pay or vacate, the spouses still failed to comply. Petitioner sent demand letters to Catalina, the last dated January 18, 2006, all to no avail, leading petitioner to file a complaint for accion publiciana, rescission of contract to sell, with damages and attorney's fees.

In their Answer, the spouses Bautista alleged that the mortgage contract was void for lack of Porferio's conformity, that the contract to sell contained a pactum commissorium provision, that the contract should be considered an equitable mortgage, and that the interest rates imposed were excessive. They likewise raised the defense that Porferio's signature in the contract to sell was forged.

Petitioner filed a Motion for Summary Judgment, asserting that no genuine issue of fact existed because the spouses admitted that the Transfer Certificate of Title was in petitioner's name, failed to specifically deny the material allegations of the complaint, and raised only legal—not factual—issues. The spouses opposed, contending that a full-blown trial was necessary to determine the existence of an equitable mortgage, the propriety of the interest rates, the presence of pactum commissorium, and whether Porferio's signature was forged. The RTC denied the motion, finding genuine issues of fact requiring trial, and the CA affirmed.

• CA Erred on Mortgage Validity: Petitioner argued that the CA erred in ruling that the mortgage contract is void despite the mortgage not being the subject matter of the complaint.
• CA Failed to Rule on Core Issues: Petitioner maintained that the CA failed to rule on the issues relating to accion publiciana and rescission of the contract to sell, which are the actual subject matter of the complaint.
• No Pactum Commissorium or Equitable Mortgage: Petitioner contended that there is absolutely no pactum commissorium or equitable mortgage to speak of.
• No Genuine Issue of Fact: Petitioner asserted that the spouses admitted the TCT was in petitioner's name, failed to specifically deny material allegations of the complaint, and raised only legal issues—not factual ones—so summary judgment was proper.

• Factual Issues Reinforce Denial: Respondents argued that petitioner itself raised factual issues to be resolved during trial, which reinforced the propriety of the denial of the Motion for Summary Judgment.
• Need for Full-Brown Trial: Respondents maintained that a full-blown trial was necessary to determine whether there was an equitable mortgage, the propriety of interest rates, the presence of pactum commissorium, and whether Porferio's signature was forged.

• Propriety of Summary Judgment: Whether the RTC's denial of petitioner's Motion for Summary Judgment is proper.

• Propriety of Summary Judgment: Yes, the denial was proper. Genuine issues of fact existed—equitable mortgage, pactum commissorium, forgery, and interest rates—each requiring the presentation of evidence, making summary judgment unavailable under Rule 35 of the Rules of Court.

• Propriety of Summary Judgment: Summary judgment is a procedural device available only where the pleadings, supporting affidavits, depositions, and admissions show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. A genuine issue of fact is one that requires the presentation of evidence, as distinguished from a sham, fictitious, contrived, or false claim. In determining genuineness, the court must examine not merely the pleadings but the facts alleged under oath in the affidavits submitted with the motion and opposition. Petitioner's argument that the spouses admitted the TCT was in its name was insufficient, as this was merely one piece of evidence for the trial court to assess. Petitioner's contention that the Answer lacked specific denials was unavailing, because the spouses pointed out the exact allegations they denied and referenced their Special and Affirmative Defenses and Compulsory Counterclaims, satisfying Rule 8, Section 10. Petitioner's characterization of the defenses as purely legal was incorrect: whether a contract is an equitable mortgage is a question of fact, as the trial court must review the document itself and the parties' intent under Article 1602 of the Civil Code; whether pactum commissorium exists likewise requires examination of contractual stipulations and party intent; and whether forgery exists is settled as a question of fact. Because these defenses pertained to the preceding mortgage contract, which the spouses alleged was the basis of the subsequent contract to sell, resolving them at trial would affect the resolution of the rescission issue. The Court also noted that under the 2019 Amended Rules of Civil Procedure, any action of the trial court on a motion for summary judgment shall not be subject to an appeal or petition for certiorari, prohibition, or mandamus.

• Summary Judgment — A procedural device that allows parties to avoid long litigation where the pleadings show no genuine issues of fact to be tried. It is proper only if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The moving party must establish unequivocally the absence of genuine issues of fact or that the issue posed is so patently insubstantial as to constitute a genuine issue. The trial court is duty-bound to examine the motion, supporting documents, and opposition to determine if genuine issues of fact exist.

• Genuine Issue of Fact — An issue of fact requiring the presentation of evidence, as distinguished from a sham, fictitious, contrived, or false claim. A factual issue is considered sham when, by its nature, it cannot be proven, or the party tendering it has neither sincere intention nor adequate evidence to prove it—typically arising from denials made merely for the sake of creating an issue and gaining delay.

• Equitable Mortgage as a Question of Fact — Whether a contract is an equitable mortgage is a question of fact, because the trial court must review evidence, including the assailed document and the intent of the parties, to determine if the transaction falls under any of the presumptions in Article 1602 of the Civil Code.

• Pactum Commissorium as a Question of Fact — Whether pactum commissorium exists is a question of fact, as the trial court must examine contractual stipulations and the intent of the parties.

• Forgery as a Question of Fact — Whether forgery exists is a question of fact, well-settled in jurisprudence.

• Specific Denial Under Rule 8, Section 10 — A defendant must specify each material allegation of fact the truth of which he does not admit and, whenever practicable, set forth the substance of the matters upon which he relies to support the denial. The word "specific" or its derivatives need not be expressly used; it suffices that the defendant points out the exact allegations intended to be denied. The requirement to set forth the substance of supporting matters is qualified by "whenever practicable"—there is no stringent requirement.

• "A summary judgment is permitted only if there is no genuine issue as to any material fact and [the] moving party is entitled to a judgment as a matter of law." — This passage, quoted from Calubaquib vs. Republic, states the controlling test for the propriety of summary judgment and is the ratio decidendi of the case.

• "In determining the genuineness of the issues, and hence the propriety of rendering a summary judgment, the court is obliged to carefully study and appraise, not the tenor or contents of the pleadings, but the facts alleged under oath by the parties and/or their witnesses in the affidavits that they submitted with the motion and the corresponding opposition." — This passage defines the court's duty when ruling on a motion for summary judgment, emphasizing that the inquiry extends beyond the pleadings to the sworn facts in the affidavits.

• "the question of whether a contract is an equitable mortgage is a question of fact." — This statement resolves petitioner's argument that the spouses' defenses were purely legal, establishing that equitable mortgage and related defenses require evidentiary presentation and thus preclude summary judgment.

• Philippine Racing Commission vs. Manila Jockey Club, Inc., G.R. No. 228505, June 16, 2021 — Cited for the doctrine that summary judgment is proper only where no genuine issue of fact exists, and that the court must examine the affidavits rather than merely the pleadings to determine genuineness.

• Calubaquib vs. Republic — Quoted for the formulation that a factual issue is sham when it cannot be proven or the party has no sincere intention or adequate evidence to prove it, and for the rule that the court must appraise facts alleged under oath in the affidavits.

• Seconds To Go vs. Fabriano Societa Per Azioni, Inc., G.R. No. 213698, November 12, 2014 — Cited for the definition and purpose of specific denial under Rule 8, Section 10, supporting the finding that the spouses' Answer contained sufficient specific denials.

• Spouses Basa vs. De Leon, G.R. No. 197503, October 9, 2019 — Cited for the proposition that whether a contract is an equitable mortgage is a question of fact.

• Spouses Pen vs. Spouses Julian, 776 Phil. 50 (2016) — Cited for the proposition that the existence of pactum commissorium is a question of fact, requiring examination of contractual stipulations and party intent.

• Philippine Savings Bank vs. Sakata, G.R. No. 229450, June 17, 2020 — Cited for the settled rule that whether forgery exists is a question of fact.

• Rule 35, Section 3, Rules of Court (1997 Rules of Civil Procedure) — Governs motions for summary judgment; provides that judgment shall be rendered forthwith if the pleadings, supporting affidavits, depositions, and admissions show that, except as to damages, there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The Court applied this provision to find that genuine issues of fact existed, precluding summary judgment.

• Rule 8, Section 10, Rules of Court (Specific Denial) — Requires a defendant to specify each material allegation of fact the truth of which he does not admit and, whenever practicable, set forth the substance of matters supporting the denial. The Court applied this provision to find that the spouses' Answer contained sufficient specific denials, defeating petitioner's argument that material allegations were not specifically denied.

• Article 1602, Civil Code (1949) — Enumerates the instances when a contract shall be presumed to be an equitable mortgage, including inadequate price, vendor remaining in possession, extension of redemption period, purchaser retaining part of the purchase price, vendor binding himself to pay taxes, and any case where the real intention of the parties is to secure payment of a debt. The Court cited this provision to support the conclusion that determining equitable mortgage is a question of fact requiring evidentiary presentation.

• 2019 Amended Rules of Civil Procedure — Provides that any action of the trial court on a motion for summary judgment shall not be subject to an appeal or petition for certiorari, prohibition, or mandamus. The Court noted this provision as consistent with its ruling, though the 1997 Rules governed the case since it was filed before May 1, 2020.

Zalameda, Rosario, and Marquez, JJ., concurred. Perlas-Bernabe, J., was on official leave.