G.R. No. L-14155; October 29, 1919
CELERINO TIONGCO, as administrator of the estate of Lucas Batallones, plaintiff-appellant, vs. CATALINO NAVARRO and DAVID BATALLONES, defendants. CATALINO NAVARRO, appellant.

FACTS:
Celerino Tiongco, as administrator of the estate of Lucas Batallones, filed an action in the Court of First Instance of Laguna against Catalino Navarro and David Batallones. The plaintiff sought: (a) an injunction to prevent Navarro from interfering with certain real and personal property; (b) a declaration that certain contracts (Exhibits A, B, C, and D) were simple loan documents and not pacts de retro (sales with a right of repurchase); (c) a declaration that another contract (Exhibit F) had been rescinded; (d) a declaration that the properties were owned by the estate of Lucas Batallones; (e) an order for Navarro to return the properties; and (f) an award of damages. Navarro claimed the properties were sold to him by Lucas Batallones under pacts de retro, and since Batallones failed to repurchase them within the stipulated periods, ownership had been consolidated in him. The trial court declared the contracts as simple loans, ordered the estate to pay Navarro a specified sum with interest, and directed Navarro to return the properties and for the Register of Deeds to cancel his Torrens titles and reissue them in favor of Batallones. Both Tiongco (as plaintiff) and Navarro appealed.

ISSUE:
Whether the contracts (Exhibits A, B, E, and C) executed by Lucas Batallones in favor of Catalino Navarro are simple loans with mortgage or pacts de retro (sales with a right of repurchase).

RULING:
The Supreme Court reversed the trial court’s decision. After examining the terms of the contracts, the Court held that they were unequivocally pacts de retro and not mere loans. The contracts contained clear language of sale, transfer, and alienation of the properties, coupled with a stipulation granting the vendor (Batallones) the right to repurchase within a specified period. The Court found that Batallones failed to exercise his right of repurchase within the agreed periods, resulting in the consolidation of title in favor of Navarro. This consolidation was further evidenced by Torrens certificates of title issued in Navarro’s name. Consequently, the Supreme Court absolved Catalino Navarro from all liability under the complaint, dismissed the action, and ordered the plaintiff-administrator to deliver any of the disputed properties in his possession to Navarro. No costs were awarded.