Bernice Legaspi v. Spouses Rita

Summary

This case involved a dispute over whether a Deed of Sale with Right to Repurchase was actually an equitable mortgage. Spouses Ong needed P2,655,000 to buy back their foreclosed property from PSLB bank. Petitioner Legaspi provided the money and the parties executed a deed giving the Ongs four months to repurchase. When the Ongs failed to repurchase despite extensions, Legaspi sought consolidation of title. The RTC ruled it was a valid sale, but the CA reversed, finding it was an equitable mortgage under Art. 1602 Civil Code based on several circumstances including the vendors remaining in possession and extensions granted. The Supreme Court affirmed the CA's finding that it was an equitable mortgage, emphasizing that courts should look beyond the contract's nomenclature to determine the parties' true intention based on surrounding circumstances. The case demonstrates the application of Art. 1602 Civil Code in distinguishing between genuine sales with right to repurchase and concealed mortgages.