Heirs of Jose Reyes, Jr. v. Amanda S. Reyes

Summary

This property dispute involved interpretation of a 1955 transaction between the Reyes family and Spouses Francia over a residential lot in Pulilan, Bulacan. The Supreme Court reversed lower court decisions, ruling that the 'Kasulatan ng Biling Mabibiling Muli' was an equitable mortgage, not a pacto de retro sale, based on Civil Code Article 1602 badges including vendors remaining in possession and continuing to pay taxes. The Court held that the mortgagees' acceptance of payments beyond the 10-year redemption period estopped them from claiming period expiration. Alejandro Reyes, who paid the debt in 1970, became merely an assignee of the mortgage credit, not the owner, and his 'Magkakalakip na Salaysay' validly extended the redemption period. The Court nullified Alejandro's consolidation of ownership document, finding it violated the prohibition against pactum commissorium, and upheld the petitioners' co-ownership rights. The decision protects equitable mortgagors from circumvention of usury laws and pactum commissorium through disguised sale contracts.