Facts:

This case revolves around the dispute between Perfecto Adrid and Carmen Silangcruz, the plaintiffs and appellants, and Rosario Morga, along with Mamerto Morga and others, who are the defendants and appellees. The events date back to August 8, 1938, when Perfecto Adrid and his wife executed a document labeled "Sale with Right to Repurchase" regarding Lot No. 550 of the San Francisco Malabon Estate Subdivision, located in General Trias, Cavite. The property was sold to Eugenio Morga for P2,000, with a stipulation that Adrid and Silangcruz could repurchase the lot within two years for the same amount, plus 12% interest per annum. Despite the agreed-upon period for repurchase expiring, Adrid and Silangcruz did not exercise this option. In 1956, Perfecto Adrid, now alone after Carmen’s death, initiated legal action against the administratrix of Eugenio Morga's estate to recover Lot No. 550. Adrid sought restitution of the property, proposing to pay the sale price and de

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Facts:

Background of the Transaction

• On August 8, 1938, Perfecto Adrid and his wife, Carmen Silangcruz, owners of Lot No. 550 of the San Francisco Malabon Estate Subdivision in General Trias, Cavite, executed a document entitled “Sale with Right to Repurchase.”
• The contract purported to sell the lot to Eugenio Morga for the sum of P2,000, with an option for the sellers to repurchase the lot within a period of two years for the same amount plus 12% interest per annum.

Contractual Terms and Subsequent Actions

• The document (Exhibit A) included a stipulation (Paragraph 5) stating that if the sellers failed to repurchase during the stipulated period, Eugenio Morga would become the “complete and absolute owner” of the property without further documentation.
• After the execution of the contract, Morga took possession of the lot and appropriated the produce (palay), and upon his death in 1952, his heirs continued to enjoy the harvest.
• Despite the lapse of the repurchase period (which should have ended in 1940), the certificate of title and tax declaration remained in the names of the original sellers, with the taxes being paid by Morga.
• The factual background was further supported by a stipulation of facts submitted by the parties, detailing the registration of the deed, the possession and collection of produce, and the financial particulars (e.g., yearly produce of 30 cavans of palay valued at P10 per cavan).

Dispute and Procedural History

• In 1956, Perfecto Adrid and his son (following the death of Carmen) instituted an action against the administratrix of the deceased Eugenio Morga, seeking to recover Lot No. 550 by offering to pay P2,000 and demanding an accounting of the produce harvested since 1938.
• The Court of First Instance in Cavite rendered a decision on July 15, 1957, holding that the contract was a sale with the right to repurchase, and since the sellers failed to repurchase within the stipulated period, the title had consolidated in favor of the vendee’s heirs.
• The case was subsequently elevated, where the appellate court carefully re-examined the deed and the acts of the parties.

Underlying Financial and Legal Inconsistencies

• There was an inherent anomaly in valuing a parcel of land, reportedly about 312 hectares with an annual palay harvest worth P300, at only P2,000, raising questions as to the true nature of the transaction.
• The provision of 12% interest per annum was indicative of compensation for the use of a loan rather than a sale, suggesting that the lot was intended merely as security for the borrowed sum, not as a definitive conveyance of title.

Issue:

Nature of the Transaction

• Whether the contract executed on August 8, 1938, was truly a sale with a right to repurchase or if the acts of the parties indicated a conversion into a contract of antichresis (i.e., non-pecuniary use through the collection of the produce).

Impact of Possession on the Contract

• Whether Morga’s taking of possession of the lot and his subsequent enjoyment of its produce effectively transformed the original sale with right to repurchase into an equitable mortgage or a contract of antichresis.

Evidentiary and Doctrinal Considerations

• Whether the stipulation of facts and the conduct of the parties (keeping the title and tax declaration in the vendors' names despite possession) supported the characterization of the contract as an equitable mortgage.
• How the interest provision and the alleged inadequate purchase price influenced the interpretation of the transaction’s true nature.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)