GR 130138; (February, 1999) (Digest)
G.R. No. 130138 . February 25, 1999. SPOUSES MACARIO MISENA and FLORENCIA VERGARA-MISENA, petitioners, vs. MAXIMIANO RONGAVILLA, respondent.
FACTS:
Petitioner Florencia Vergara-Misena sold an undivided half of a lot to respondent Maximiano Rongavilla in 1983. In 1986, needing money, Rongavilla mortgaged the same property to the spouses Misena to secure a P12,000 loan. He failed to pay the loan fully. In 1988, Rongavilla and his wife signed a document titled “Deed of Absolute Sale,” purportedly selling the property back to the petitioners, with the remaining P10,000 loan balance applied as the purchase price. Rongavilla refused to vacate the property thereafter.
Rongavilla admitted signing the deed but claimed it was a falsity. He alleged the petitioners, through fraud and misrepresentation, made him sign the document by misleading him to believe it was a foreclosure document, not an absolute sale. He asserted the property’s market value was over P80,000 at the time, making the P10,000 consideration grossly inadequate, and that he had attempted to repay P16,000, which the petitioners refused.
ISSUE
Whether the disputed “Deed of Absolute Sale” is a true contract of sale or an equitable mortgage.
RULING
The Supreme Court denied the petition and affirmed the Court of Appeals’ decision, ruling the contract was an equitable mortgage. The Court emphasized that its review power is generally limited to questions of law, and the appellate court’s factual findings, supported by the record, are binding. These findings established the presence of circumstances under Article 1602 of the Civil Code giving rise to the presumption of an equitable mortgage.
Specifically, the Court found: (1) the consideration of P10,000 was grossly inadequate compared to the alleged P80,000 market value; (2) the vendor, Rongavilla, remained in possession of the property even after the purported sale; and (3) the property was originally given as security for a loan. Parol evidence was properly admitted to prove the parties’ true intention was merely to secure the debt, not to transfer ownership. The presumption of fraud under Article 1332 of the Civil Code also stood unrebutted, as the petitioners failed to show they fully explained the contract’s terms to Rongavilla, who alleged ignorance and lack of education. Consequently, the transaction was declared an equitable mortgage, upholding Rongavilla’s right to redeem the property.