Facts:

• The case involves Roberto Barreto vs. Tomasa Arevalo, et al. (G.R. No. L-7748, August 27, 1956).
• The dispute centers on ownership of a residential lot in Sampaloc, Manila.
• On January 10, 1945, Barreto purchased the property from Arevalo for P12,000, assuming a P30,000 mortgage.
• Barreto leased the property back to Arevalo for P420 monthly, with an option for Arevalo to repurchase it.
• Arevalo borrowed P4,000 from Barreto, due by December 31, 1946.
• Both the sale and lease agreements were registered on January 11, 1945.
• On July 22, 1946, Arevalo sold the property to Nicanor and Ambrosio Padilla for P25,000, despite knowing about Barreto's prior purchase.
• Arevalo later claimed the transaction was an equitable mortgage, not a sale.
• The Supreme Court ruled that the transaction was a sale with a right to repurchase, allowing Arevalo to redeem the property for P16,000.
• The Padillas registered their deed of sale and obtained a certificate of title, claiming ignorance of Barreto's prior sale.
• Barreto filed a suit to annul the Padillas' title and sought damages for lost rental income or the property's value of P49,000, plus attorney's fees.
• The trial court dismissed Barreto's complaint, favoring the Padillas, prompting Barreto's appeal.

Issue:

• (Unlock)

Ruling:

• The Supreme Court ruled that the trial court erred in refusing to admit Barreto's evidence, as the documents were relevant.
• The Court upheld the trial court's finding that the Padillas had no knowledge of Barreto's prior sale, affirming their good faith.
• The award of moral damages to the Padillas was reversed b...(Unlock)

Ratio:

• The Supreme Court emphasized that the trial court's refusal to admit Barreto's evidence was erroneous because the documents were executed before the Padillas' acquisition and were pertinent to the case.
• The Court noted that the Padillas, having acquired their title from Arevalo, were bound by her prior agr...continue reading