4 Heirs of Jose Reyes Vs Amanda Reyes

HEIRS OF JOSE REYES, JR. vs. AMANDA S. REYES, ET AL.
Equitable Mortgage
Facts:
Antonio Reyes and his wife, Leoncia Reyes were owners of a parcel of residential lot in
Pulilan, Bulacan, where they constructed their dwelling. The couple had four children, Jose, Sr.,
Teofilo, Jose, Jr., and Potenciana. Antonio Reyes died intestate, and was survived by Leoncia and
their three sons. Potenciana predeceased her father, and is survived by her children.
In 1955, Leoncia Reyes and her three sons executed a Kasulatan ng Biling Mabibiling Muli,
whereby they sold the land and its existing improvements to the Spouses Francia for P500,
subject to the vendor’s right to repurchase the same for the same amount “sa oras na sila’y
makikinabang.” Leoncia’s songs and their respective families remained in possession of the
property and paid realty taxes thereon. They did not repay the amount of P500.
Alejandro, the son of Jose, Sr., paid to the heirs of Sps. Francia the amount for the
obligation of Leoncia, his uncles and his father, and eventually Alejandro was able to secure a deed
entitled Pagsasa-ayos ng Pag-aari at Pagsasalin, executed by the heirs of Sps. Francia, whereby
they transferred and conveyed to Alejandro all their rights and interests in the property for P500.
In 1970, Alejandro executed a Kasulatan ng Pagmeme-ari, wherein he declared that he
had acquired all the rights and interests of the heirs of Sps. Francia, including the ownership of the
property, after the vendors had failed to repurchase within the given period. Nevertheless,
Alejandro, Leoncia and Jose, Sr. executed a Magkakalakip na Salaysay, by which Alejandro
acknowledged the right of Leoncia, Jose, Sr., Teofilo and Jose, Jr. to repurchase the property at any
time for the same amount of P500.
In 1993, Alejandro died intestate and was survived by his wife, Amanda Reyes, and their
children (respondents). In 1994, Amanda asked the heirs of Teofilo and Jose, Jr. to vacate the
property because she and her children already needed it, but it went unheeded. Hence, she filed
an action for quieting of title and reconveyance over said lot.
Issues:
(1) W/n the Kasulatan ng Biling Mabibiling Muli was an equitable mortgage.
(2) W/n the petitioners are barred from claiming that the transaction under the Kasulatan
was equitable mortgage by their failure to redeem the property for a long time.
Arguments:
Respondents –
 Alejandro acquired ownership of the property by virtue of the deed of Pagsasa-ayos ng
Pag-aari at Pagsasalin executed by the heirs of Sps. Francia.
 Alejandro had consolidated his ownership of the lot in his Kasulatan ng Pagmeme-ari.
 Likewise, Alejandro granted Leoncia, Jose, Sr., Teofilo and Jose, Jr. the right to repurchase
the property, but they failed to do so.
Petitioners –
 The Kasulatan was an equitable mortgage and not a pacto de retro sale, as the mortgagors
had retained possession of the property.
 The heirs of Sps. Francia could not have validly sold the property to Alejandro through the
Pagsasaayos.
 Alejandro’s right was only to seek reimbursement of the P500.00 he had paid from the co-
owners, Leoncia, Jose, Sr., Teofilo, Jose, Jr., and the heirs of Potenciana.
Ruling:
(1) YES, the Kasulatan is an equitable mortgage. There was no dispute that the purported
vendors had continued in the possession of the property even after the execution of the
agreement, and that the property had remained declared under Leoncia’s name for
taxation purposes, with the realty taxes due being paid by Leoncia, despite the execution
of the Kasulatan. Under Article 1602 paragraphs (2) and (5), “The contract shall be
presumed to be an equitable mortgage, in any of the following cases: (2) when the vendor
remains in possession as lessee or otherwise; x x x (5) when the vendor binds himself to
pay the taxes on the thing sold.” The existence of any one of the conditions under Article
1602 suffices to give rise to the presumption that the contract is an equitable mortgage,
and the same is true in this case.
(2) NO, petitioners are not barred from claiming that the transaction under the Kasulatan is
equitable mortgage. Considering that the period of redemption stated in the Kasulatan,
which is “sa oras na sila’y makinabang,” signified that no definite period had been stated,
the period to redeem should be ten years from the execution of the contract. Upon the
expiration of said 10-year period, mortgagees Sps. Francia or their heirs should have
foreclosed the mortgages, but they did not do so. Instead, they accepted Alejandro’s
payments, until the debt was fully satisfied in 1970. The acceptance of payments even
beyond that 10-year period of redemption estopped the mortgagees’ heirs from insisting
the period to redeem the property had already expired.

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HEIRS OF JOSE REYES, JR. vs. AMANDA S. REYES, ET AL.

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