Title
Bellido vs. Court of Appeals
Case
G.R. No. 106822
Decision Date
Dec 21, 1993
Petitioners sought annulment of a deed of absolute sale, claiming it was an equitable mortgage. SC ruled in their favor, nullifying the sale and reinstating the original title.
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Case Digest (G.R. No. 106822)

Facts:

Background of the Case

  • Petitioners Flordeliz L. Bellido and Villamor H. Bellido filed a complaint in the Regional Trial Court (RTC) of Quezon City seeking the annulment of a deed of absolute sale covering a house and lot located in Don Antonio Heights, Quezon City. The property was formerly covered by Transfer Certificate of Title (TCT) No. 277097 in the name of Flordeliz L. Bellido.

Petitioners' Version

  • In October or November 1986, the petitioners, being financially distressed, offered the subject property valued at P900,000.00 as collateral for a loan of P300,000.00 from the respondents, spouses Mamerto P. del Rio and Estelita L. del Rio.
  • An advance of P85,284.39 (via PNB Check No. 131229) was given by the respondents to the petitioners, which was used to pay the balance of their loan with the Central Bank Provident Fund Office.
  • Before releasing the balance of the loan, the respondents demanded the execution of a deed of absolute sale and the surrender of the title to the property, assuring the petitioners that these documents would merely serve as collateral for the loan.
  • The petitioners executed the deed of absolute sale on March 5, 1987, but they only received a total of P240,000.00, including the advance of P85,284.39. The respondents deducted P60,000.00 as advance interest for one year.
  • In April-May 1987, the respondents attempted to evict the petitioners' caretaker, Joel de Leon, from the property.

Respondents' Version

  • The respondents claimed that the petitioners secured a loan of P85,284.39 through an aunt of the respondents, with the promise to repay the loan within three months. If the petitioners failed to repay, they agreed to sell the property to the respondents for P300,000.00, including the loan amount.
  • The petitioners failed to repay the loan within the stipulated period, even after a one-month extension. They voluntarily executed the deed of absolute sale in the office of the respondents' counsel.
  • The respondents paid all back taxes on the property since 1982 and had the property titled under their names. They informed the petitioners' caretaker of their ownership and took possession of the property.

RTC and Court of Appeals Decisions

  • The RTC dismissed the petitioners' complaint and upheld the deed of absolute sale. The Court of Appeals affirmed the RTC decision but deleted the awards of moral damages and attorney's fees in favor of the respondents.

Issue:

  1. Whether the Court of Appeals erred in overlooking the evidence that P85,284.39 of the amount given by the respondents was used to redeem the subject property from the Central Bank Provident Fund, and whether this indicates that the property was not truly sold.
  2. Whether the Court of Appeals erred in not applying Article 1602, No. 6 of the Civil Code, which provides that a contract shall be presumed to be an equitable mortgage if it can be inferred that the real intention of the parties was to secure the payment of a debt.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Conclusion:

The Supreme Court ruled in favor of the petitioners, declaring the transaction as an equitable mortgage and nullifying the deed of absolute sale. The property's title was ordered to be reinstated in the name of Flordeliz L. Bellido.


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