G.R. No. L-14961 - Quinga vs. Court of Appeals

Filomena Salas incurred a debt of P200.00 to Ceferino Datoon prior to September 1934.
When unable to pay the debt, Salas proposed to mortgage or sell the property under pacto de retro.
Instead, Datoon prepared a deed of absolute sale on September 18, 1934, which Salas signed on condition that she could remain in possession and repurchase the property.
On October 30, 1935, Datoon registered the deed of sale; he cancelled Original Certificate of Title No. 40792 and secured the issuance of Transfer Certificate of Title No. 14841 in his name.

An accounting on or about October 10, 1940 revealed that the outstanding debt had been reduced to P100.00.
On the same day, complying with a prior promise, Datoon executed a private document (referred to as Exhibit A) allowing Salas to repurchase the property within ten years.
Upon Datoon’s death in 1943, Flora Quinga was appointed judicial administratrix of his estate.
Salas, having been denied her right to repurchase by the administratrix, initiated suit and deposited P100.00 with the Clerk of the Court of First Instance of Iloilo as payment for the repurchase.

In the Court of First Instance of Iloilo, the trial court determined that the transaction between Datoon and Salas was an absolute sale.
The trial court also found Exhibit A to be a forgery.
Consequently, judgment was rendered dismissing Salas’ complaint; the court ordered that possession of the property be turned over to the defendant (or the appointed receiver) and awarded damages for several agricultural years along with costs.

Salas appealed the decision to the Court of Appeals.
The Court of Appeals held that the real contract between Salas and Datoon was, in substance, an equitable mortgage rather than an absolute sale.
Evidence supporting this finding included:

The inadequacy of the sale price for a property of more than two hectares of riceland.
The fact that Salas maintained continuous possession of the property until the vendee (Datoon) or his successor began receiving a share in the crops only in 1944.
Inconsistencies between the registration of the title and the delayed commencement of benefits from the property.

With respect to Exhibit A, the Court of Appeals ruled that the evidence was incomplete because of missing stenographic transcripts of key witness testimonies.

The report of the NBI examiner, which initially cast doubt on the document’s genuineness, was countered by the credible testimonies of Salas and her witness, Virginia Cordero.
Even if Exhibit A were admitted as a forgery, it would only render the document of no probative value without altering the true nature of the underlying transaction.

The Court of Appeals reversed the decision of the trial court and issued several orders:

Ordering Flora Quinga, as administratrix, to execute a deed of reconveyance in favor of Salas upon withdrawal of the sum deposited as part of the repurchase price.
Directing that the physical possession of the lot be relinquished to Salas immediately after the execution of the deed.
Ordering further steps regarding the collection of fines imposed upon the stenographer for non-compliance with certain resolutions.

The appellate decision also held that Salas’ cause of action had not been time-barred, as the property remained subject to the equitable mortgage until foreclosure proceedings were initiated.

Was the transaction between Ceferino Datoon and Filomena Salas an absolute sale or merely an equitable mortgage secured by a loan?

Should Exhibit A be considered authentic or adjudged a forgery?
If deemed a forgery, what is the impact on the credibility of the respondent and the overall resolution of the transaction’s nature?

Does the inadequacy of the sale price (P200.00 for more than two hectares of land) indicate that the transaction was in substance a mortgage rather than a bona fide sale?

Why did Salas continue in possession of the property and why did the vendee (or his successor) start receiving a share in the crops only in 1944, long after the alleged sale?

Has the cause of action of respondent Salas prescribed considering the time elapsed, or is it still viable given the nature of the underlying mortgage contract?