G.R. No. 128759 - RAYMUNDO TOLENTINO AND LORENZA ROÑO, SUBSTITUTED BY THEIR HEIRS, REPRESENTED BY EMMANUELA ROÑO, AS ATTORNEY-IN-FACT, VS. COURT OF APPEALS, JOSEFINA F. LETICIA, CRESENTE, ARSENIO, VIOLETA, RAMON, TERESITA, CELIA, YOLANDA, ROLANDO, RESTITUTO AND REDENTOR, ALL SURNAMED DE GUZMAN, GLOR

Ruling

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants as follows: (1) Declaring the said transaction between spouses de Guzman and the defendants as a mere equitable mortgage and the corresponding documents as deeds of mortgage securing the loan of P18,000.00. (2) Ordering the plaintiffs to pay the defendants the unpaid balance of the loan in the amount of P3,750.00 with legal interest until paid in full. (3) Ordering the defendants to reconvey by appropriate documents the subject property to the plaintiffs. (4) Ordering the defendants jointly and severally to pay to the plaintiffs the amount of Three Thousand Pesos (P3,000.00) for and as attorneys fees. Costs against defendants. [3] In rendering the foregoing decision, the trial court considered foremost the real parties intent in entering into the transactions. It observed that the Deed of Promise to Sell, the Deed of Absolute Sale, and the Contract to Sell were related transactions which indicated that petitioners did not intend to hold the property as owner, but as security for the loan extended to respondents. Additionally, the consideration involved in these transactions was P18,000, the amount of the loan, which showed that petitioners did not profit from the said transactions. Further, the trial court found that the de Guzmans remained in possession of the property and continued to pay the real estate taxes even after the execution of the Deed of Absolute Sale. These, according to the trial court, are badges of equitable mortgage. Invoking Articles 1602 and 1604 of the Civil Code, [4] the trial court ruled that the presence of these elements in the instant case was sufficient to raise the presumption that the contract between the parties was an equitable mortgage. Petitioners appealed to the Court of Appeals, which sustained the trial courts decision, as follows: WHEREFORE, premises considered, the appealed decision (dated March 21, 1988) of the Regional Trial Court (Branch 162) in Pasig City in Civil Case No. 40555 is hereby AFFIRMED in toto. With costs against the defendants/appellants. SO ORDERED.