On  September  7,  1907, Ricardo Nolan filed  an amended complaint  in the Court of First  Instance of  Occidental Negros against Emilio Escay and Cristeta Gonzaga, alleging that by means of an instrument ratified on the 6th of June, 1903, the defendant Escay acknowleged that he was owing the  Compania  General de Tabacos  de Filipinas the sum of P22,086.43, with  interest at 9  per cent per annum, and he bound himself to pay it, together with the interest,  on or before the 1st day of March, 1905; that in order to guarantee the payment of the said sum and the interest due thereon, the defendant debtor executed a lien on the hacienda called  Lanoglanog,  now  known  by  the  name  of Teresa, and  on  all  the buildings, machinery, and other appurtenances thereof, and, further, on a house of strong materials,  the property of defendant's wife,  Cristeta Gonzaga, who conferred  upon her  husband power  for this purpose; that the instrument above referred to set forth the location of the said house and the area,  the metes and  bounds  of the land; that the said Hacienda  Teresa  is situated in the pueblo of Saravia and has the area and boundaries mentioned in the complaint; that on the  30th of June,  1905, the defendant Escay, while still living, was owing the said company the sum of P29,824.43, with  interest at 9 per cent per annum from  the said date; that on  the 25th  of October of that year, Luis G. Espoy, the  head of the Iloilo branch  of the aforementioned company,  delivered to Alejandro  Montelibano y Ramos, among other  credits,  that of the defendant Escay,  for collection; that, on  the  3d  of August, 1906, Vicente Muntadas, the head of the  said Iloilo branch, transferred  to the said Montelibano y Ramos, by a public instrument, all  the rights  and  actions  that pertained to the Compania  General  de  Tabacos  with respect to the  said  debt which  the  defendant Escay still owed, together with the interest thereon  from June  30, 1905; that by an  instrument  of  the 20th  of February,  1907, Montelibano  y  Ramos  transferred to  the plaintiff  Nolan all his rights in  the said credit against the defendant Escay, who was duly notified of the  transfer made by the company of his  debt in favor of Montelibano y  Ramos and of the transfer effected by the latter in favor of the plaintiff Nolan;  that,  notwithstanding  the demands, which several times were made to Escay for the payment of his debt, he had not paid the same in whole or in part, nor the interest thereon; that, one day in May,  1907, Emilio  Escay died, and by an order issued by the judge of the Tenth District, on the  14th of August following, his  widow, Cristeta Gonzaga, was  appointed administratrix of his intestate  estate, she having been duly sworn for  the purpose on  the 2d of September of the same year; that to the amended  complaint is  attached as  a  part  thereof Exhibit  1,  a  copy  of the public instrument of June 6, 1903, executed by the deceased Escay during his lifetime  in favor of the  said Compaiiia General de Tabacos; and that a  copy of the present complaint has been filed with the land registry  office  of the province; and  therefore this court is prayed to  render a decision against Cristeta Gonzaga, personally  and as the administratrix of the intestate estate of the deceased  Escay, by ordering her to pay to the plaintiff the sum of P29,824.43, with interest thereon at the rate  of 9 per cent per annum from the  30th of June,  1905, until its  complete  payment, and to  pay the costs of the suit, and that, in case  of insolvency, the sheriff proceed to sell the property given as security, or the part  thereof that it  be  necessary to sell; and to  provide any other just and adequate remedy.

The document Exhibit 1,  which accompanies  the complaint, is the instrument executed on the 6th of June, 1903, before the notary Gregorio Yulp, by Emilio Escay y Hernandez and Eduardo Cedrun, as the representative in Iloilo of the Compainia General de Tabacos, and it appears therein that, according to an instrument of the 30th of June, 1902, the said company granted to Emilio Escay a loan of 8,000 pesos,  Mexican  currency, wherewith  to pay the  expenses of the Hacienda Lanoglanog, belonging to him and situated within  the  district of Saravia, Island  of Negros,  which loan was made  for a period of two  years  from  the said date, with  interest at 9 per  cent per annum,  and that  as a guaranty and security for compliance with the obligation the debtor, Escay, mortgaged to the said company the said Hacienda  Lanoglanog,  subsequently called the Teresa,  of 179 hectares  in  area, bounded as described therein, the same being provided with a warehouse of strong materials, a  steam engine of  9 horsepower, a furnace and  other appurtenances for the making of sugar; that, according to the settlement had on the 21st of March, it was found that Escay owed the creditor company the sum of P15,086.43; that notwithstanding this debt, the Compania General de Tabacos granted  another new credit of 7,000 pesos to the same party,  Escay, in  order that  he  might continue the work of grinding, on his  aforesaid hacienda,  which sum was to  be  delivered to him in installments  in the  months and for the purposes expressed in the  instrument and, added to the previous sum of  15,086.43 pesos, made a total of P22,086.43,  the  debtor being allowed, by regular deliveries of  sugar  in Iloilo, P1.50 for each picul of sugar; that the debtor Escay  agreed  to deliver to  the creditor company the entire crop of the years  1903  and 1904 that should  be  produced on  his hacienda, estimated at 5,000 piculs of sugar, without his selling  or  assigning to  anyone else or  deducting therefrom the smallest portion for any consideration or under any pretext; that  the deliveries of the sugar were to be made until the  1st of  March, 1905, fixed as the date when  the entire crop should be ground, the company reserving the right to place an agent on the hacienda, at  the  expense of the debtor Escay, whenever it  should so consider proper; that the amounts received, as well  as  those the debtor should  receive up to the total of the credit allowed, should draw  interest at the  rate of 9 per cent  per annum, from the date of their receipt, the aforesaid 1st of March, 1905, being fixed as the date for the settlement  of the  payments of capital and interest; that it was agreed that, if the sugar of the crop of 1903-4 should be insufficient to balance the accounts of the  debtor, the crop of  1904-5 should be  delivered to the creditor company in the same manner  and under the same conditions,  the date for the  complete payment and settlement of the capital  and  interest in such case  to  be  extended; that, among other conditions and in all cases, Escay should allow the company 1% per cent as commission on the total amount of the sugar delivered;  that as  security and for the purpose of an exact compliance with the engagements contained in the said instrument, the debtor Escay deeded, conveyed, and sold to the creditor company  all the fruits and crops of his hacienda, delivering them by traditio manu longa and transferring  full dominion over them until the debt should be satisfied; that in case of failure to pay the same on  the  conditions expressed,,  the  creditor company could,  if  it so wished,  take possession of the said fruits and crops, sell them or store them, .for which  purpose the debtor Escay conferred ample  and  sufficient power, without limitation whatever, in favor of the creditor company, binding himself to hold as proper and final whatever proceedings might be taken by the latter by virtue of this instrument; that,  notwithstanding all the foregoing, the debtor Escay had agreed to sell under pacto de retro, as a guaranty  for the  due fulfilment of the obligation assumed by  him, the Hacienda Lanoglanog, now called the  Teresa, of which he was the owner, together with all the buildings, machinery, and other appurtenances existing thereon, and a house constructed of  stone and wood  with  a zinc  roof, belonging to  his  wife,  Cristeta  Gonzaga, and  situated in the town of Bacolod, for the sum of P22,086.43, on condition that if, during the  term stipulated or before the 1st of March,  1905,  he  should pay all  the said sum, with the interest due  thereon, to the creditor  company, with the deliveries of sugar agreed upon, the latter would execute to him an instrument of reversion of the said hacienda and house; but if the said  term, to  terminate on the 1st of March,  1905,  should elapse and  the debtor Escay should be unable to avail himself of his right of redemption, then this sale should assume the character of one absolutely and irrevocably consummated and the company should be considered  to have acquired all the rights pertaining to  it in connection with the  said properties; that it was also stipulated  between both parties that, if the company should take possession of the properties sold for any reason whatever,  at any time, that it should collect the principal and interest owing by  Escay,  the latter or  his heirs should recover the absolute ownership of the said properties, the debtor binding himself,  in  his own name and in that of his wife,  who, for  this purpose, had conferred power on him by an instrument executed in Bacolod,  June 1,  1903, to guarantee the company  the peaceful possession of the property.

On the  25th of November,  1907, the defendant Cristeta Gonzaga filed, with the permission of the court, an amended answer, setting forth that  she admitted the facts alleged in paragraphs 1, 2, 3, 5, 6, 7, 8, and  10 of the amended complaint; that she denied the facts alleged in  paragraphs 4 and 9 of the same, and reserved her answer with regard to the exactness of the copy of the said instrument, Exhibit 1, until she should have compared it with its original; that as a special defense she alleged that in the instrument of acknowledgment of  the  debt,  executed on June  6,  1903, before the notary Yulo,  the following condition  was stipulated between the  parties: It is agreed by both contracting parties that should the  Compania General de Tabacos, for any reason whatever, take possession of the properties sold, as soon as the latter shall have collected the principal and interest owing it by the said Escay,  it shall return to him or to his heirs the ownership of the properties concerned; and,  therefore,  the defendant prayed the  court to absolve her from the complaint, with the costs in her favor.

The case having come to trial and  the parol evidence having been adduced by both parties,  the exhibits being made a part of the record, the judge, on January 30,  1908, rendered judgment in the  case, sentencing the defendant personally and as the administratrix of the intestate estate of  her deceased husband,  Emilio  Escay, to pay to the plaintiff the sum of P29,824.43 and the interest thereon at the rate of 9 per cent per annum from the 1st of  July, 1906,  until paid, and the  costs.  Against this judgment the defendant party took exception and prayed for a new trial, on the ground that the said judgment was manifestly contrary to the  weight of the evidence, which petition was denied  by  the court,  on February 8,  1908, and exception taken  thereto by the appellant, who duly filed the  corresponding bill  of exceptions  which was  approved  and transmitted to the office of the clerk  of this  court.

It is asserted in appellant's  brief that the  lower court, in passing judgment  in this case, incurred the following errors:

1. The lower  court erred in  finding that Emilio Escay owed the  Compania General de  Tabacos de Filipinas, on June 20, 1905, the net  sum of P29,824.43.
   
   
2. The  lower court erred in  stating that  it  had been proved  that the  deceased Escay, while still living, received a demand for the payment of the said balance of P29.824.43, and that he gave no heed whatever thereto.
   
   
3. The lower court erred in finding that Exhibit 1 sets forth stipulations whjch clearly show that the credit  was a mortgage one.
   
   
4. The  lower court erred in  deciding, when interpreting the substance of the contract, that the parties to this suit are convinced that the amount claimed is a mortgage debt, and that  the contract,  Exhibit  1,  is a  mortgage  credit against Escay, and not a  sale under pacto de  retro.
   
   
5. The  lower court erred  in finding that the covenant alleged  by  the defendant  in the  special defense contained in her answer, is a conditional  covenant which gave to the creditor the right to take  and keep possession  of the properties  during the term allowed  for  the  payment  of the debt, and  never could  be understood to be  a perpetual covenant.

Apparently, it is shown by the statements  set forth in the judgment appealed from  and by the terms of the sentence contained  therein,  that the court, in harmony with the tenor  of  the complaint,  was of the opinion that the complaint claimed payment of a mortgage credit by virtue of the stipulations  of an  instrument of the date of June 6, 1903.

It is true that, judging  from the  statements made  by the debtor Emilio Escay in the said instrument, the latter received as a loan from the Compania General  de Tabacos various sums aggregating P22,086.43, bearing  interest at 9  per cent per annum; but it is no less true that the said debtor, to  insure the fulfillment of the engagement  to pay his debt with the sugar that he might succeed in producing on his  Hacienda Lanoglanog or Teresa during the years 1903,1904, and  1905, had to deed over and convey by sale to his creditor all  the fruits and crops  of the  said hacienda, authorizing the  latter, in case of nonpayment, to take possession of the said  fruits and  crops, to dispose of them and to sell them, and he also agreed  to sell to the creditor company the  said hacienda under pacto de retro, together with  its buildings,  machinery, and. other  appurtenances existing thereon, and  the house owned  by  his  wife, Cristeta Gonzaga, situated in  the  town  of Bacolod, for  the aforesaid  sum received as a loan, the company binding itself to resell  to him the  said properties  if  the  debtor should be able to pay his  debt  with  sugar; otherwise  the sale was to be absolute and irrevocable.

It was  also stipulated  between  the  contracting parties that should the company take possession, for any  reason whatever, of the properties  sold, once it had collected  the principal  and interest due, the  ownership of the said properties  should revert  to the debtor Escay or  to  his heirs.

With the exception  of these stipulations  and the clause guaranteeing possession, the aforesaid instrument expresses no special  contract  of mortgage  of the said  properties, nor any agreement nor even a statement reproducing  or maintaining, in  the said instrument of 1903, the mortgage contracted  in the previous  instrument of June, 1902,  for this latter  concerns  a loan of P8,000, and  the mere reference made in the former to this credit, secured by a mortgage on the said hacienda, and the fact of such  loan being included, on account of its not having  been paid,  in a larger one which is the subject of the said subsequent instrument of  1903, is not sufficient to show the  existence of a mortgage, without the manifest will of the  interested parties, when what was expressly stipulated afterwards  is a sale with right of repurchase.

On the foregoing hypothesis, it is unquestionably evident that the plaintiff  party,  the  cessionary of the rights  of the Compafiia General de Tabacos, is not entitled  to prosecute an action  for the  collection of a mortgage credit on realty, under the  authority  of the provisions  of articles 254 et seq. of the Code of Civil Procedure and by virtue of a contract of mortgage based on, articles 1874 et seq. of the Civil Code and articles 138 et seq. of the Mortgage Law.

The sum loaned to  the debtor was converted  into the selling price  of the properties specified in the said instrument, according to the stipulations therein made between the contracting parties, and the term agreed  upon for the repurchase has much more than elapsed; and although the debtor remained in possession of the  said properties sold, notwithstanding his not  having  duly repurchased them, the creditor has not thereby lost his right thereto,  provided he exercises  it in due time, by virtue  of the contract contained in the said instrument of June 6,  1903.  (Arts. 1507,  1509, 1518, Civil Code.)

The defendant appellant acknowledges the fact and the legitimacy of the sale with right of repurchase aforementioned, and he has not alleged any ground whatever by virtue of which the said contract of sale may be considered dissolved and without  legal  effect and  the return of its price  demanded; wherefore the suit filed by the plaintiff Ricardo Nolan  is  from all points of  view improper, and therefore  the judgment appealed  from  can not be  sustained, the court below having incurred errors 3  and 4 of those  alleged by the appellant, as hereinbefore shown.  In view of the nature and fundamental basis of this  decision, it is not necessary to discuss the propriety or impropriety of the other  errors attributed to the judgment.

Wherefore, it is proper in our opinion, in reversing the judgment appealed from,  to absolve, as we do hereby absolve, from the said complaint the defendant Cristeta Gonzaga,personally  and as the administratrix  of the estate of  her deceased  husband  Emilio  Escay,  without special finding as to the  costs in both instances, and to the plaintiff is reserved his rights pursuant to the agreement contained  in the instrument  aforesaid, and  he  may exercise the same, should he  deem  proper so to do, in conformity with  the law.

Arellano, C. J.,  Johnson, Moreland, and Trent, JJ., concur.