GR L 3433; (July, 1951) (Digest)
G.R. No. L-3433 July 16, 1951
LEON BORLAZA and LEONCIA BORGONIA, petitioners, vs. GREGORIO RAMOS and GUILLERMA ARVISU, respondents.
FACTS
On December 26, 1936, Severino Pile, acting for himself and his siblings, executed a deed purporting to sell two adjoining parcels of land in Lilio, Laguna, to Isidro Borgonia and Gregorio Ramos for P200. The instrument, drawn up and notarized by petitioner Leon Borlaza, was a deed of sale with the right to repurchase reserved by the vendors. The Piles later repurchased the northern part from Isidro Borgonia for P100. On March 27, 1943, the Piles sold both parcels to the spouses Leon Borlaza and Leoncia Borgonia (petitioners). In May 1943, the petitioners tendered P100 to respondent Gregorio Ramos to repurchase the southern part, but Ramos refused, claiming the right to repurchase had expired. The petitioners then deposited P100 with the clerk of court. Ramos executed an affidavit consolidating his title on June 21, 1943. The petitioners filed an action praying that the deed be declared an equitable mortgage and that Ramos be compelled to accept the repurchase price and deliver possession. The trial court and the Court of Appeals held the instrument was a sale with pacto de retro, not an equitable mortgage, and that the right to repurchase expired after four years from its execution due to the lack of an express agreement on the repurchase period.
ISSUE
1. Whether the deed of sale with right to repurchase is in fact an equitable mortgage.
2. Whether the period for repurchase had expired.
RULING
1. The Supreme Court affirmed the lower courts’ finding that the instrument was a sale with pacto de retro, not an equitable mortgage. The Court held that the term “estoppel” used by the lower courts against petitioner Leon Borlaza (who notarized and prepared the deed) was not in its technical sense but as an aid in weighing evidence and determining the parties’ intent. The deed’s terms were clear and unambiguous, showing it was a sale with right to repurchase.
2. The Supreme Court ruled that the period for repurchase was four years. The deed contained the stipulation “from now on and until the repurchase has not as yet (been) done,” which merely reserved the right to repurchase but did not constitute an express agreement on the time frame. Under Article 1508, paragraph 1, of the Civil Code, in the absence of an express period, the repurchase period is four years from the execution of the contract. Consequently, the right to repurchase expired on December 26, 1940, and the petitioners’ tender in 1943 was too late. The judgment of the Court of Appeals was affirmed.