CUGUYAN vs.

SANTOS
GR No. 10265 MARCH 3, 1916
CARSON, J.
Adopted Statutes

DOCTRINE:
UNITED STATES DONCTRINE: The doctrine which must be applied in such cases in this jurisdiction does not differ materially from the
equitable doctrine frequently announced and applied by the Supreme Court of the United States in the numerous cases in which similar
questions have come to it from the various States and Territories within its jurisdiction.

CASE SUMMARY:
Appeal by certiorari by the Chief of Staff and the Judge Advocate General of the Armed Forces of the Philippines from a decision of the
Court of First Instance of Rizal, involving a petition (for declaratory relief) filed by the herein eighteen (18) respondents, for a judicial
declaration of their rights under Republic Act 1862, as amended by Republic Act 4902, in the matter conversion of lump sum gratuity
to annual retirement pension.

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/ RATIO:
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 1000 php 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.

The authors of the new Code of Civil Procedure (Act No. 190 of the Civil Commission) were American lawyers, and the avowed purpose
and object of its enactment was to introduce in these Islands a system of procedure in civil cases modelled upon precedents in general
use in the United States. Most of its provisions are borrowed directly from the statute books of one or other of the States of the Union,
and many of its more important provisions have been construed and applied by both state and federal courts of last resort. We have,
therefore, in the Supreme Court Reports of the various States from which these provisions were borrowed, numerous precedents of
strong and persuasive, if not conclusive authority; and, except in so far as they are affected by the substantive law in force in this
jurisdiction or necessarily modified by local conditions, we have always felt ourselves bound by the rulings of the Supreme Court of the
United States in construing and applying statutory enactments modelled upon or borrowed from English or American originals.

The various provisions of the new Code of Civil Procedure which have any bearing on the question now under consideration, or statutory
provisions of like tenor and effect, have been construed and applied by all or nearly all the courts are not wholly in accord as to the
reasoning upon which their conclusions are based, it may safely be asserted that with substantial, if not absolute unanimity, they have
arrived at substantially similar results.

We shall consider first, whether the provisions of the new Code of Civil Procedure should be so construed as to deny the right to the
borrower in such cases, to introduce extraneous and parol evidence to support his allegations as to the existence of a parol agreement,
whereby the lender obligated himself to hold the title to the lands merely as security for the repayment of the debt; and further whether
there is anything in that Code which would deny the right of the borrower in such cases, upon proof of such allegations, to enforce the
agreement in accordance with its terms.

The authors of the new Code of Civil Procedure (Act No. 190 of the Civil Commission) were American lawyers, and the avowed purpose
and object of its enactment was to introduce in these Islands a system of procedure in civil cases modelled upon precedents in general
use in the United States. Most of its provisions are borrowed directly from the statute books of one or other of the States of the Union,
and many of its more important provisions have been construed and applied by both state and federal courts of last resort. We have,
therefore, in the Supreme Court Reports of the various States from which these provisions were borrowed, numerous precedents of
strong and persuasive, if not conclusive authority; and, except in so far as they are affected by the substantive law in force in this
jurisdiction or necessarily modified by local conditions, we have always felt ourselves bound by the rulings of the Supreme Court of the
United States in construing and applying statutory enactments modelled upon or borrowed from English or American originals.

SC DECISION: The order entered in the court below, sustaining the demurrer to the complaint must be reversed, and the record
remanded for further proceedings, without costs in this instance.