GR 107259; (June, 1997) (Digest)
G.R. No. 107259 June 9, 1997
RAYMUNDO M. DAPITON, now substituted by ROWELLY DAPITON, REPORME DAPITON, LINDA DAPITON, DENNIS DAPITON and MEARLY DAPITON, petitioners, vs. COURT OF APPEALS and MELJOHN DELA PEÑA, respondents.
FACTS
Petitioner Raymundo M. Dapiton (now substituted by his heirs) and private respondent Meljohn dela Peña entered into a transaction on May 6, 1967, evidenced by a written document purporting to be a deed of absolute sale over Dapiton’s house and lot in Almeria, Leyte, for P400.00. On May 8, 1967, private respondent made annotations on the deed, one on the left-hand margin and another at the back, stating that Dapiton had one year to repurchase the property. Petitioners contend the true transaction was a loan of P400.00 secured by the property. Private respondent maintains it was an absolute sale, and the annotations were made without consideration merely to appease Dapiton’s children who objected to the sale. Dapiton attempted to redeem the property by sending P400.00 via money orders on May 3, 1968, which were received by private respondent’s wife on May 4, 1968. Private respondent rejected the redemption in a letter dated May 9, 1968, claiming the sale was absolute. The Regional Trial Court dismissed petitioners’ complaint for annulment of the deed of sale. The Court of Appeals initially reversed the RTC but, upon reconsideration, issued an Amended Decision affirming the RTC’s dismissal.
ISSUE
Whether the transaction between Dapiton and private respondent is an absolute sale or a sale with a right to repurchase (or an equitable mortgage).
RULING
The Supreme Court granted the petition, reversed the amended decision of the Court of Appeals, and ruled in favor of petitioners. The Court resolved the doubt regarding the true nature of the contract in favor of petitioners, applying Article 1603 of the Civil Code, which provides that in case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage. The Court found private respondent’s actuations “highly suspect, if not downright dishonorable,” noting he prepared a contract not reflecting the true intent, added annotations granting a right of repurchase, then evaded payment to let the period lapse, and later argued the annotation was invalid for lack of consideration. The Court ordered private respondent to accept the P400.00 deposited by petitioners and to execute a deed of sale over the subject property in favor of petitioners.