G.R. No. 30246, August 31, 1929
AGRIPINO DE OCAMPO, ET AL., plaintiffs-appellees, vs. JUAN ZAPORTEZA, ET AL., defendants-appellants.

FACTS

The plaintiffs, Agripino de Ocampo and others, executed a document (Exhibit A) in favor of the defendants, Juan Zaportezza and others, which on its face appeared to be a deed of sale with a right to repurchase. The defendants later had this instrument annotated as a lien on the title of the land (Lot No. 4210) during registration proceedings and subsequently obtained a certificate of transfer covering the entire lot. The plaintiffs filed an action to annul Exhibit A, alleging that the true agreement between the parties was a simple mortgage to secure loans totaling P3,000 (P1,000 received by the deceased Alejandro de Ocampo and P2,000 used to pay his debt and funeral expenses), and that the document was made to appear as a sale with repurchase upon the suggestion of the defendants’ attorney. The plaintiffs presented testimonial evidence to support this claim. The trial court ruled in favor of the plaintiffs, declaring Exhibit A to be a mortgage.

ISSUE

Whether the instrument Exhibit A expresses the true agreement of the partiesspecifically, whether it constitutes a sale with a right to repurchase or an equitable mortgage.

RULING

The Supreme Court AFFIRMED the judgment of the trial court. It held that Exhibit A does not express the true contract between the parties. Based on the evidence, the true intention was to secure a loan, making the transaction an equitable mortgage, not a sale with repurchase. Consequently, the plaintiffs have the right to redeem the property by paying the secured debt of P3,000 within 90 days from the finality of the decision.

Furthermore, the Court ruled that the certificate of transfer obtained by the defendants, which covered the entire Lot No. 4210 (with about 2,000 coconut trees) instead of only the portion subject to the mortgage (with 700 trees), is invalid as to the excess. The defendants hold the title for the excess portion (with 1,300 trees) in trust for the plaintiffs and are ordered to execute a deed reconveying that portion to them.