No. L-36821. June 22, 1978
MAIN TOPIC – Contracts – Classification
Petitioner Jose P. Dizon was the owner of the three (3) parcels of land situated in Pampanga. He constituted mortgage lien in favor of the Development Bank of the Philippines and Philippine National Bank to secure his indebtedness. Petitioner Dizon having defaulted in the payment of his debt, the Development Bank of the Philippines foreclosed the mortgage and executed “Certificate of Sale,” in favor of the said bank. Alfredo G. Gaborro became interested in the lands of Dizon. They entered into a contract of “Deed of sale with assumption of mortgage” and “Option to Purchase Real Estate” After the execution of said contracts, Alfredo G. Gaborro took possession of the three parcels of land. Gaborro made several payments to the DBP and PNB and introduced improvements, cultivated the lands, raised sugarcane and other crops and appropriated the produce to himself. He also paid the land taxes thereon.