G.R. No. 152168 December 10, 2004
HEIRS OF THE LATE SPOUSES AURELIO AND ESPERANZA BALITE, petitioners, vs. RODRIGO N. LIM, respondent.

FACTS

The spouses Aurelio and Esperanza Balite owned a parcel of land. Upon Aurelio’s death, Esperanza and their eight children became co-owners, with Esperanza inheriting a specific undivided share. In 1996, needing funds for medical expenses, Esperanza, through a daughter, offered to sell her pro indiviso share to respondent Rodrigo Lim for P1,000,000. They executed a Deed of Absolute Sale stating a price of P150,000 for a 10,000-square-meter portion, but simultaneously executed a Joint Affidavit declaring the true price to be P1,000,000, payable in installments. Only Esperanza and two children were initially privy to the sale.
Lim took possession and made partial payments. Other heirs later discovered the sale and objected, leading to litigation. Esperanza later executed a Special Power of Attorney authorizing one son to collect the balance. The heirs filed suit, arguing the sale was void, an equitable mortgage, or fraudulent due to the price discrepancy.

ISSUE

The core issues were: (1) the validity of a deed of sale stating a consideration lower than the true price; (2) whether the transaction constituted an equitable mortgage; and (3) the validity of selling a specific portion of an undivided co-owned property.

RULING

The Supreme Court affirmed the Court of Appeals with modification, upholding the sale’s validity. First, a deed of sale is not void merely because it states a price lower than the true consideration. Under Article 1353 of the Civil Code, a contract remains valid if founded on a true and lawful cause. The Joint Affidavit proved the true price was P1,000,000, binding the parties and their successors. Second, the transaction was not an equitable mortgage. Article 1602 of the Civil Code enumerates instances creating a presumption of an equitable mortgage, but none were present. The clear intent, as evidenced by the deed, affidavits, and payment receipts, was an absolute sale, not a loan with security.
Third, the sale of a specific metes and bounds portion of an undivided property is not void. Under Article 493 of the Civil Code, a co-owner may alienate only their ideal or proportionate share. The sale effectively transferred Esperanza’s ideal share in the co-ownership (9,751 sq m), not the 10,000 sq m described. Thus, Lim became a co-owner to the extent of the seller’s share. The Court ordered the Register of Deeds to cancel the title and issue a new one reflecting the co-ownership, with Lim owning an undivided 9,751 sq m and the heirs owning the remainder.