Macapinlac vs repide (September 20, 1922) G.R. No.

18574 Facts: The case was instituted for the purpose of declaring plaintiff as owner of a real estate property and to nullify the Torrens title, which was in respondent’s name. Plaintiff also wanted to recover possession over the property with damages. Plaintiff owned the real estate property located in Pampanga. Later, plaintiff acquired a loan to Bachrach Garage & Taxicab for a price of an automobile. To secure payment, plaintiff executed fourteen promissory notes: 11 in the hands of Bachrach and 3 in the hands of the payee of the company. As security and guaranty of payment, plaintiff executed a deed of sale with a right to repurchase. More than a year later, respondent acquired the rights of Bachrach over the properties by paying P5000. Be it noted that during the conveyance of rights, Repide knew of the purpose of the transfer of title – to secure the debt owing to Bachrach by the plaintiff. He also knew that the debt had been paid and that only a half of the debt existed. Afterwards, Repide caused for the transfer of title into his name by making it appear that the purported sale was true. During those times, respondent Repide was in actual possession of the property and was enjoying its fruits. Plaintiff filed a case to recover possession in which the Court of First Instance decided in favour of respondent. Due to this, plaintiff filed for a review of the case. Issue: 1. Whether or not the contract was a sale de retro or a mortgage. 2. What contract should govern between the parties? Held: (1) The court held that since the conveyance was executed to secure a debt, it should follow that in equity, said conveyance must be treated as a security or substantially as a mortgage. This decision was supported by the case of Cuyugan vs Santos, in which the court discuss the conditions in which a conveyance absolute on its face may be treated as a mortgage.
. . The doctrine has been firmly established from an early day that when the character of a mortgage has attached at the commencement of the transaction, so that the instrument, whatever be its form, is regarded in equity as a mortgage, that character of mortgage must and will always continue. If the instrument is in its essence a mortgage, the parties cannot by any stipulations, however express and positive, render it anything but a mortgage, or deprive it of the essential attributes belonging to a mortgage in equity. The debtor or mortgagor cannot, in the inception of the instrument, as a part of or collateral to its execution, in any manner deprive himself of his equitable right to come in after a default in paying the money at the stipulated time, and to pay the debt and interest, and thereby to redeem the land from the lien and encumbrance of the mortgage; the equitable right of redemption, after a default is preserved, remains in full force, and will be protected and enforced by a court of equity, no matter what stipulations the parties may have made in the original transaction purporting to cut off this right. (3 Pom. Eq. Jur., sec. 1193.) And finally, concerning the legal effects of such contracts, the same author observes: . . . Whenever a deed absolute on its face is thus treated as a mortgage, the parties are clothed with all the rights, are subject to all the liabilities, and are entitled to

all the remedies of ordinary mortgagors and mortgagees. The grantee may maintain an action for the foreclosure of the grantor's equity of redemption; the grantor may maintain an action to redeem and to compel a reconveyance upon his payment of the debt secured. If the grantee goes into possession, he is in reality a mortgagee in possession, and as such is liable to account for the rents and profits. (3 Pom. Eq. Jur., sec. 1196.)

(2) In this case, the court cited the case of Barretto vs. Barreto, where the heirs of a mortgagee of an estate were found in possession of mortgaged property more than thirty years after the mortgage had been executed; and it was shown that the mortgage had never been foreclosed. In effect, the rights held by the parties, both the mortgagor and mortgagee, were essentially the same as the ones in a contract of antichresis.

In antichresis, the non-payment of the debt does not vest the ownership to the creditor; however, the debtor cannot recover the property for its enjoyment without paying the full amount of his indebtedness. At this time, the creditor is under obligation to apply the fruits derived from the estate in satisfaction, first, of the interest on the debt, if any, and, secondly, to the payment of the principal. By doing so, the fruits will be applied in satisfaction for the mortgage debt.

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