G.R. No. L-12666; May 22, 1959
Juan Claridad, substituted by Trinidad, plaintiff-appellant, vs. Isabel Novella, defendant-appellee.

FACTS

On April 25, 1932, spouses Lorenzo Claridad and Isabel Togle executed a deed of sale with right to repurchase over a parcel of land in favor of Paterno Aposagas, with a redemption period of ten (10) years and granting the vendee usufructuary rights during that period. On March 10, 1936, Aposagas transferred his rights to Isabel Novella. The vendors failed to redeem the property within the stipulated period. On May 20, 1942, twenty-four days after the redemption period expired, Novella consolidated her ownership. On March 27, 1944, the vendors a retro (now represented by their heirs, the appellants) deposited P800.00 with the clerk of court by way of consignation in an attempt to redeem the land.
The heirs filed an action for reconveyance on March 13, 1944. On May 5, 1944, the trial court (Judge Francisco Arellano) dismissed the complaint and ordered the return of the consigned amount. The plaintiffs appealed to the Court of Appeals, but the records were destroyed during the war. Instead of reconstituting the records, the plaintiffs filed a new case on June 3, 1950. The defendant moved to dismiss based on res judicata (the prior 1944 decision), which the trial court (Judge Jose Teodoro, Sr.) granted. The Supreme Court (in G.R. No. L-4207) reversed this dismissal order on October 24, 1952, and remanded the case for further proceedings.
Subsequently, it was discovered that the original case records were not destroyed. Following a joint motion by the parties, the original case (No. 54) was revived for appeal. The Court of Appeals, finding that the appeal involved only a question of law, certified the case to the Supreme Court.

ISSUE

1. Whether the trial court erred in not finding that the appellants made a valid tender of payment and consignation for redemption before the expiration of the redemption period.
2. Whether the contract between the parties was an equitable mortgage and not a sale with pacto de retro, thus allowing redemption even after the period.

RULING

1. On the factual issue of tender and consignation: The Supreme Court declined to review the trial court’s factual findings. The trial court found the appellant Juan Claridad’s claim of having offered to repurchase in March 1942 or 1943 unreliable and his testimony suspicious. It noted the lack of witnesses for these alleged offers, contrasted with his having a witness for the 1944 offer, and the inexplicable delay in making the consignation until 1944 when the courts were functioning normally in 1942 and 1943. The consignation was therefore made out of time, almost two years after the redemption period expired on April 25, 1942. Since the case was certified to the Supreme Court purely on a question of law, these factual conclusions are binding.
2. On the nature of the contract as an equitable mortgage: The Supreme Court rejected the appellants’ belated contention that the contract was an equitable mortgage. The Court held:
* The appellants had consistently alleged the transaction was a sale with right to repurchase in both their 1944 and 1950 complaints.
* The alleged inadequacy of price (P800.00 vs. an assessed value of P1,710.00) is not a conclusive indicator of an equitable mortgage in a pacto de retro sale, as the price is often set lower to facilitate redemption.
* The grant of usufruct to the vendee during the redemption period is consistent with a sale, as usufruct is an attribute of ownership.
The use of the Spanish term “devolviesemos*” (we would return) in the contract pertains to the repayment of the price for repurchase and does not indicate a loan.
Therefore, the contract was a valid sale with pacto de retro. The failure to redeem within the stipulated 10-year period converted the sale into an absolute one in favor of the appellee. The decision of the trial court dismissing the complaint was affirmed.