Cuyugan vs.

Santos (34 Phil 100, March 3, 1916)

FACTS:
Plaintiff Eutiquiano Cuyugan’s mother, Guillerma Cuyugan, borrowed the amount of Php 3,500
from defendant Isidoro Santos. A deed of sale for a parcel of land with the right to repurchase for the
sum of Php 3,500 was executed by both parties. Although the said document purports to be a deed of
sale, it was intended by the parties to evidence the loan of the nominal purchase price and to serve as a
security for the repayment of the amount of the loan. Plaintiff's mother was left in possession of the
land as a tenant of the defendant and paid rent of Php 420.00. The rent was subsequently reduced to
Php 300.00 and plaintiff and his mother then continued to possess the land peaceably. After some time,
the defendant set up a claim of ownership in himself and threatened to eject the plaintiff from the land
after the latter failed to pay rent in the amount of Php 420.00, the original amount before reduction.
Plaintiff filed a complaint and prayed that the defendant be required to accept the amount tendered
and to cancel the formal deed of conveyance. Defendant filed a demurrer to the complaint which the
lower court sustained. Hence, this appeal.

ISSUE:
Whether or not the contract in question is one of equitable mortgage?
RULING:
Yes. Where a sale of lands has been made reserving to the vendor a right to repurchase under
stipulated conditions, and one or more partial payments have been made by the vendor and accepted
by the purchaser, the acceptance of such partial payments is absolutely incompatible “with the idea of
irrevocability of the title of ownership of the purchaser” at the expiration of the term stipulated in the
original contract for the exercise of the right of repurchase. Citing the case of Lichauco vs. Berenguer,
the Court said, “The vendee, who has been reimbursed by the vendor for a part of the repurchase price,
is bound to fulfill the obligation to sell back, derived from the sale with right to repurchase, or must
show reason why he may keep this part of the price and, notwithstanding his so doing, be considered
released from effecting the resale. He may be entitled to require the completion of the price, or that he
be paid other expenses before he returns the thing which he had purchased under such a condition
subsequent; but the exercise of the right of redemption having been begun and admitted, the
irrevocability of the ownership in such manner acquired is in all respects incompatible with these acts so
performed.”