Facts:

The case of Jesus Azcona vs. Alberta L. Reyes and Gervasio Larracas revolves around a dispute stemming from the estate of Florentina Cordero, who passed away, leaving behind a complex series of transactions regarding real estate. Florentina Cordero had executed a power of attorney on October 11, 1920, appointing her only daughter, Alberta L. Reyes, to mortgage all her land in Pola, Mindoro. On October 22 and 23, 1920, Reyes, acting both personally and as attorney-in-fact for her mother, sold multiple parcels of land to Enrique Azcona with a right of repurchase. These transactions were effectively loans disguised as sales, with the actual consideration being P6,500 and P5,000 respectively. The agreement granted Cordero and Reyes the right to repurchase those lands within four years. Following Azcona's death on May 12, 1925, his rights passed to his son, Jesus Azcona.

After failing to exercise their right of redemption by the stipulated deadline, the parties entered into a new

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Facts:

Background of the Case

• This case involves two appeals brought by Alberta L. Reyes (in her personal capacity and as administratrix of the estate of the deceased Florentina Cordero) against the judgment rendered by the Court of First Instance of Mindoro.
• The plaintiff-appellee, Jesus Azcona, succeeded his deceased father, Enrique Azcona, and is asserting claims arising from transactions and credits related thereto.

Transactions and Instruments Executed

• On October 11, 1920, Florentina Cordero executed a power of attorney authorizing her only daughter, Alberta L. Reyes, to mortgage all her land in Pola, Mindoro.
• On October 22, 1920, Alberta L. Reyes, both in her own name and as attorney in fact for Florentina Cordero, sold five parcels of land (with certificates of title) to Enrique Azcona for P6,500, with the right of repurchase within four years; the vendors then became lessees at a yearly rental of P780.
• On October 23, 1920, similarly, a sale of one parcel of land (certificate of title No. 58) was executed for P5,000 under similar terms, with Florentina Cordero becoming the lessee at a yearly rental of P600.

Conversion to Mortgage and Subsequent Developments

• On October 1, 1925, a further power of attorney was jointly executed by Alberta L. Reyes and Florentina Cordero authorizing Gregorio Venturanza to sell and encumber their real and personal properties.
• Following the death of Enrique Azcona on May 12, 1925, his estate was judicially adjudicated in favor of his only son, Jesus Azcona, who acquired all credits evidenced in Exhibits 1 and 2.
• Due to non-exercise of the right of redemption within the prescribed four-year period and an extension request by the parties, on November 29, 1926, a deed was executed by Gregorio Venturanza (as attorney in fact) whereby the deeds evidencing the sales with the right of repurchase (Exhibits 1 and 2) were cancelled.
• The amounts of P6,500 and P5,000 (plus P1,000 representing unpaid accrued interest) were converted into a mortgage credit of P12,500 secured by the resale of the parcels and a new mortgage deed (Exhibit A).

Payment and Default

• Under the mortgage contract, the mortgagors, Alberta L. Reyes and Florentina Cordero, were permitted to liquidate the debt in installments of P2,500 with interest due at 12% per annum, payable on December 1 each year, commencing December 1, 1927.
• Partial payments were made on various dates in 1927 and 1929, reducing the principal, but subsequently, the mortgagors defaulted on further payments.
• On June 30, 1932, the unpaid balance, including accrued interest, amounted to approximately P11,958.05.

Admission and Characterization of the Transactions

• Both parties admitted and the trial court established that Exhibits 1 and 2, though in the form of deeds of sale with pacto de retro, were in substance contracts for mortgage loans.
• The deed of resale and mortgage (Exhibit A) was executed as a mere formality to secure the cancellation of the registered sales and to record the mortgage.

Points of Contention Raised in the Appeals

• Appellants argued that the resale of the land was null and void because as mortgagors they never ceased to be the true owners and the mortgagee, Enrique Azcona, had no title of ownership.
• They further impugned the validity of Exhibit A alleging it lacked proper consideration and principal obligation.
• Additionally, a question of usury was raised alleging an excessive rate of interest, though the actual contractual interest rate was established at 12% per annum.

Issue:

Validity of the Deed of Resale and Mortgage (Exhibit A)

• Whether Exhibit A, as executed by the attorney in fact, is a legal and valid mortgage deed securing the payment of the debt.
• Whether the conversion of the supposed sales with pacto de retro into a mortgage loan has met the requirements of a valid sale or mortgage transaction.

Binding Nature of the Original Contracts (Exhibits 1 and 2)

• Whether the deeds purportedly executed by Alberta L. Reyes, both personally and as agent for Florentina Cordero, are binding on Florentina Cordero despite being signed only with Alberta L. Reyes’s name.
• The effect of attaching the power of attorney to these instruments and whether it suffices to bind the principal.

Allegations of Usurious Interest

• Whether the interest rates stipulated in Exhibits 1, 2, and the mortgage deed Exhibit A constitute usurious interest contrary to law.
• The implications of compounded or accrued interest in relation to allowable rates under existing legal provisions.

Ruling:

• (Subscriber-Only)

Ratio:

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Doctrine:

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