Spouses Lehner v. Menelia Chua

Summary

The Supreme Court denied petitioners' appeal of a property dispute involving 24 memorial lots. Respondent Chua borrowed P150,000 from petitioner spouses Martires, secured by mortgage. Subsequently, a Deed of Transfer allegedly conveyed ownership to petitioners without foreclosure. The Court found the petition was filed late, as petitioners incorrectly relied on a prohibited second motion for reconsideration. On the merits, the Court affirmed the CA's finding that the Deed of Transfer was actually an equitable mortgage, not a valid sale, based on inadequate consideration, defective notarization, and the parties' true intent to provide security. The automatic appropriation of mortgaged property without foreclosure constituted prohibited pactum commissorium under Civil Code Article 2088. The decision demonstrates judicial protection against contractual arrangements that circumvent proper foreclosure procedures and exploit borrowers in financial distress.