Facts:

In the case of Antonio F. Aquino, Special Administrator of the Testate Estate of the Deceased Mariano Aquino vs. Tomas Deala, the plaintiff, Antonio F. Aquino, is the special administrator of the estate of his late father, Mariano Aquino, while Tomas Deala serves as the defendant. The events leading to the case are rooted in a series of transactions that began when Deala sought a loan from Mariano Aquino secured by real property in Manila. On May 31, 1926, Mariano Aquino provided Deala with a loan of four thousand pesos (₱4,000) under a deed which was executed as Exhibit 1. This contract stipulated that Deala would sell the described property to Mariano, who would hold it as a conditional purchaser with the right for Deala to repurchase it within four years, provided he paid the selling price plus any other due amounts. The original contract underwent several novations, with the price and rental amount being modified over time. In addition, Deala was required to construct a two-

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Facts:

Background and Parties

• The case involves Antonio F. Aquino, special administrator of the testate estate of his deceased father Mariano Aquino (plaintiff/appellee), and Tomas Deala (defendant/appellant).
• The dispute centers on a transaction originally entered into between Tomas Deala and Mariano Aquino concerning a real property described in original certificate of title No. 5014 with a house built thereon.

Nature and Formation of the Contract

• The defendant solicited a loan from Mariano Aquino, who agreed on the condition that the transaction be evidenced by a deed (Exhibit 1).
• The executed document (Exhibit 1) contained several stipulations resembling a sale with a right of repurchase (pacto de retro) but later raised questions regarding its true nature.
• Key stipulations included:
• A nominal selling price (initially P4,000) and a fixed rental rate for the property.
• An obligation imposed on the defendant to construct a two-story house of strong materials on the lot within six months.
• A resolutory condition granting the defendant a right to repurchase the property within a four-year period (later extended, with modifications, in subsequent novations).
• Provisions imposing upon the defendant obligations for payment of insurance premiums, land tax, and conservation expenses.

Subsequent Novations and Developments

• The original contract was modified multiple times:
• On December 26, 1926 (Exhibit 3): Increasing the price to P4,500 and raising the rent to P45.
• On May 31, 1927 (Exhibit 4): Increased price to P5,200 with a corresponding rent of P52.
• On April 20, 1931 (Exhibit 5): The selling price was raised to P6,600; the rent was reduced to P49.50; and the repurchase period was extended to April 20, 1933, beyond the original four-year term.
• Despite changes in quantitative terms, most contractual stipulations remained intact.
• Separate from the contract, on November 4, 1926, the defendant undertook the construction of a two-story house on the vacant part of the lot, with construction completed around June 23, 1928.
• On June 9, 1933, Mariano Aquino consolidated his title to the property as evidenced by the issuance of Transfer Certificate of Title No. 42982.

Procedural History

• After Mariano Aquino’s death, Antonio F. Aquino initiated ejectment proceedings in the Municipal Court of Manila.
• The defendant timely raised the question of ownership in both the municipal court and the Court of First Instance (CFI) of Manila.
• The municipal court ordered the defendant to evacuate the property and to pay unpaid rents plus costs.
• The Court of First Instance substantially affirmed the municipal court’s judgment, overruling the defenses raised by the defendant.

Issue:

Nature of the Contract

• Whether the document (Exhibit 1 and its novations) constituted a sale with a right of repurchase (pacto de retro) or was, in reality, a simple loan secured by real property.
• Analysis of the contractual stipulations such as the fixed “selling” price, rent, obligations to build an additional house, and other ancillary obligations (insurance, taxes, and conservation expenses) to determine the true intention of the parties.

Jurisdiction of the Lower Courts

• Whether the municipal court (and subsequently the Court of First Instance) had jurisdiction to continue hearing the case after the defendant raised the issue of the title (ownership) of the property.
• Determination of whether the evidence presented in the courts indeed implicated a meritorious dispute over the ownership rights, thereby affecting the courts’ jurisdiction in summary ejectment proceedings.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)