G.R. No. 18574 ; September 20, 1922
JOSE C. MACAPINLAC, plaintiff-appellant, vs. FRANCISCO GUTIERREZ REPIDE, ET AL., defendants; FRANCISCO GUTIERREZ REPIDE, defendant-appellee; J. F. BOOMER, defendant-appellant.

FACTS

Jose C. Macapinlac, owner of Hacienda Dolores registered under the Torrens system, executed a series of promissory notes in favor of Bachrach Garage & Taxicab Company. As security, he executed a document purporting to be a deed of sale with a right of repurchase (pacto de retro) over the hacienda in favor of E. M. Bachrach, manager of the company. This document was later assigned to Francisco Gutierrez Repide. Macapinlac alleged the transaction was an equitable mortgage, not a true sale, as the consideration was grossly inadequate and the parties intended it as security for a loan. He sought to redeem the property. Repide’s estate demurred to the complaint, arguing the Torrens title in his name was indefeasible. The trial court sustained the demurrer and dismissed the complaint without allowing Macapinlac to amend. Macapinlac appealed. Defendant J.F. Boomer also filed a cross-complaint asserting rights to the hacienda based on a prior contract with Macapinlac; a demurrer to this cross-complaint was also sustained.

ISSUE

1. Whether the appeal from the order sustaining the demurrer and dismissing the complaint was premature.
2. Whether the trial court erred in dismissing the complaint without allowing the plaintiff an opportunity to amend.
3. Whether the complaint stated a cause of action to declare the pacto de retro sale as an equitable mortgage and to allow redemption.
4. Whether the demurrer to Boomer’s cross-complaint was properly sustained.

RULING

1. No, the appeal was not premature. An order sustaining a demurrer and simultaneously dismissing the complaint is a final and appealable order, as it definitively terminates the action.
2. Yes, the trial court erred. Under Section 101 of the Code of Civil Procedure, a plaintiff must be given an opportunity to amend the complaint after a demurrer is sustained. Dismissal without this opportunity is reversible error.
3. Yes, the complaint stated a cause of action. Assuming the allegations as true for purposes of demurrer, the facts pleaded (gross inadequacy of price, possession retained by the vendor, and contemporaneous execution of promissory notes) were sufficient to support the theory that the transaction was an equitable mortgage, not an absolute sale. The Torrens certificate in Repide’s name does not bar an action to declare the true nature of the transaction, as the registration procured by fraud or in violation of trust can be attacked. The action is one for redemption, not for reconveyance based on a constructive trust.
4. No, the demurrer to Boomer’s cross-complaint was not properly sustained. For the same reasons applicable to the main complaint, and since Boomer’s claim was based on a prior contract, the cross-complaint stated a cause of action that should be ventilated in the suit.

The orders sustaining the demurrers are reversed. The demurrers are overruled. The case is remanded to the trial court with instructions to require the appellee to answer within the time allowed by law. Costs against the appellee.