GR L 1617; (August, 1949) (Digest)
G.R. No. L-1617; August 29, 1949
PANFILO B. MORALES and ENCARNACION F. MORALES, petitioners, vs. OSCAR VENTANILLA and EUFEMIA CRUZ, respondents.
FACTS
Petitioners Panfilo B. Morales and his wife executed a document entitled “Sale with Right of Repurchase” (Exhibit A) in favor of respondents Oscar Ventanilla and Eufemia Cruz over a residential lot and house for P1,600. The document stipulated that if the petitioners failed to repurchase the property on or before April 24, 1941, the sale would become absolute. Petitioners remained in possession and paid the taxes. After failing to repurchase on the stipulated date and subsequent extensions, respondents consolidated their ownership, and a new certificate of title was issued in their name. Petitioners then filed suit, alleging that the transaction was an equitable mortgage, not a true pacto de retro sale, and sought to repurchase the property. Both the trial court and the Court of Appeals ruled that the contract was a genuine sale with right to repurchase.
ISSUE
Whether the contract (Exhibit A) is a true pacto de retro sale or an equitable mortgage.
RULING
The Supreme Court affirmed the decision of the Court of Appeals, holding that the contract is a true pacto de retro sale, not an equitable mortgage. The Court deferred to the factual findings of the lower courts, which concluded that the written instrument reflected the true intention of the parties. It rejected petitioners’ arguments based on the alleged inadequacy of price, their financial embarrassment, their payment of taxes, their continued possession, and their collection of rents, as these circumstances are not necessarily inconsistent with a valid pacto de retro sale. The Court emphasized that petitioner Panfilo B. Morales, an experienced lawyer, had referred to the transaction as a sale in his correspondence, and there was no sufficient evidence to prove a contrary mortgage agreement or usury.
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