Cuyugan vs.

Santos Facts Eutiquiyano Cuyugan filed an action to compel Santos to enforce his right to repurchase in the deed of sale entered into by his late mother, Guillerma, with the defendant. Allegedly, a deed of sale of the subject land was entered into by Guillerma, and Santos with a right to repurchase the land in a stipulated period of time, although this deed of sale is executed as a security for a loan that Guillerma have with Santos. In the deed of sale, it further stated that Guillerma shall continue to have possession of the land, and pay an annual rental of Php 420 per annum which is the amount equal to the loans interest. That after sometime, Guillerma paid 1,000 pesos on the loan, which then reduced the amount of the annual rental from 400 to 320 php. When Guillerma died, Santos sent Cuyugan a notice to comply with the 420php rental, which was agreed upon prior to the payment of 1000php or he will eject Cuyugan from the land. Cuyugan then offered to pay the balance that his mother owes Santos by virtue of the right to repurchase agreed upon on the deed of sale, but Santos refused to do so. A demurrer to the complaint was filed by Santos, which was sustained by the court alleging that the period of the right to repurchase has long been expired. Issue Whether or not the demurrer should be sustained or overruled by the court Held The Supreme Court held that what should be given force is the intention of the parties, and not the provisions of the instrument on its face. Under the provisions of contracts, for a valid contract to exist, there should be; 1) consent, 2) cause, 3) consideration. Thus, in the present case, what is consented by both parties is that this deed of sale is only in consideration for a loan, or by a nature of a contract of mortgage. Moreover, by way of evidence it was established by the court that the parties indeed treat such as a contract of loan rather than a deed of sale when Santos, when given by Guillerma 1000php in favor of such contract, lowered the payment of the rental from 400-320 php. Since the agreement was the 400 be equal to the interest per annum, when the loan was reduced, the interest as well reduced. This transaction proved that the treatment and the intention of the parties was indeed as a security for the loan, and not as a deed of sale appearing before the face of the contract. Thus, the Supreme Court ruled that the demurrer of evidence should be overruled.