Maxima P. Saclolo v. Romeo Marquito

Summary

This case involved a property dispute where petitioners inherited coconut land and entered into what appeared to be a sale with right to repurchase in 1984 for P1,000.00, but was actually an equitable mortgage. Both the Regional Trial Court and Court of Appeals found it was an equitable mortgage but held that petitioners' redemption right had expired under the four-year period in Article 1606. The Supreme Court reversed, ruling that since the transaction was an equitable mortgage rather than a true sale with right to repurchase, the four-year redemption period under Article 1606 did not apply. Instead, the 10-year prescription period under Article 1144 governed the action. The Court found that respondents' continued extension of loans and failure to consolidate ownership evidenced recognition of the mortgage relationship for 19 years. The cause of action only accrued in 2004 when respondents refused redemption, making the 2005 lawsuit timely. The case was remanded for determination of the outstanding loan amount and proper foreclosure procedures, emphasizing protection against pactum commissorium.