Facts:

The case of Eutiquiano Cuyugan vs. Isidoro Santos revolves around a transaction that took place on April 3, 1895, when Guillerma Cuyugan borrowed P3,500 from Isidoro Santos. In return, she executed a document that appeared to be a "venta con pacto de retro" (sale with right of repurchase) for four parcels of land, with an annual rental fee set at P420. In 1896, Guillerma paid the full rental amount of P420, and in 1897, she paid P324, along with a claim from her son that she also paid P1,000 towards her debt, a claim that Santos denied. From 1898 until 1913, Guillerma consistently paid P300 annually as rent, except for 1908, where Santos claimed the amount was P350, a claim disputed by Guillerma's side. In 1913, Santos demanded P420 for the year's rent, but instead of paying, Eutiquiano Cuyugan deposited P2,800 in the provincial treasury and initiated legal action to have the deed of conveyance canceled and to compel Santos to accept the deposit. Santos file...

Facts:

1. Initial Transaction (1895):

   • On April 3, 1895, Guillerma Cuyugan received P3,500 from Isidoro Santos.
   • Guillerma executed a document appearing to be a venta con pacto de retro (sale with right of repurchase) for four parcels of land.
   • The yearly rental was fixed at P420.

2. Payments Made by Guillerma Cuyugan:

   • In 1896, Guillerma paid P420 as one year's rent.
   • In 1897, she paid P324 as rent, and her son claimed she also paid P1,000 on account of her debt, which Santos denied.
   • From 1897 to 1913, P300 per year was paid as rent, except for 1908, where Santos claimed P350 was paid, but this was disputed.

3. Demand and Legal Action (1913):

   • In 1913, Santos demanded P420 as the correct rental amount from Eutiquiano Cuyugan (Guillerma’s son).
   • Eutiquiano deposited P2,800 in the provincial treasury and filed a lawsuit to cancel the deed and require Santos to accept the P2,800 tendered.

4. Procedural History:

   • Santos filed a demurrer, arguing that the written document could not be varied by parole evidence.
   • The trial court sustained the demurrer, but the Supreme Court reversed it on two grounds:
     • Parole evidence is admissible to prove that the document was a security for a loan, not an absolute sale.
     • The payment of P1,000 in 1897 and the subsequent reduction of rent supported the claim that the transaction was a loan secured by a mortgage.

5. Trial Court’s Findings:

   • The trial court found that Guillerma Cuyugan paid P1,000 to Santos, reducing the loan to P2,500.
   • The court concluded that the document was a mortgage, not a venta con pacto de retro.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Parole Evidence Rule:

   • Parole evidence is admissible to prove that a document appearing to be a venta con pacto de retro is, in fact, a mortgage securing a loan.

2. Reduction of Loan Amount:

   • The payment of P1,000 in 1897 and the subsequent reduction of rent from P420 to P300 annually demonstrated that both parties recognized the loan had been reduced to P2,500.

3. Equitable Considerations:

   • Sales with a right of repurchase are not favored by law. It would be unjust for Santos to retain the property after receiving rent and partial payment of the loan.

4. Prescription:

   • The acceptance of interest on the loan tolled the prescriptive period, making the action to redeem the mortgaged property timely.