Thelma P. Olea v. Court of Appeals

Summary

The Supreme Court ruled that a 1947 'Sale Con Pacto de Retro' was actually an equitable mortgage under Article 1602 of the New Civil Code. Despite the document's form as a sale with right to repurchase, several factors indicated mortgage intent: the vendors remained in possession for 40 years, delivered 1/3 of produce annually as interest, and the contract contained a pactum commissorium clause. The Court emphasized that even one circumstance under Article 1602 suffices to establish equitable mortgage, and pacto de retro sales are not favored in case of doubt. Since no valid sale occurred, petitioner acquired no title from her mother and could not recover possession. Additionally, any mortgage enforcement action had prescribed after 39 years under the 10-year limitation period. The decision reinforces the protective nature of equitable mortgage doctrine in Philippine property law.