G.R. No. 156522 ; May 28, 2004
ERLINDA SAN PEDRO, petitioner, vs. RUBEN LEE and LILIAN SISON, respondents.

FACTS

Petitioner Erlinda San Pedro executed a document titled “Kasulatan ng Ganap na Bilihan ng Lupa” over her 17,235-square meter agricultural land in Bulacan in favor of respondents Ruben Lee and Lilian Sison for P150,000.00. San Pedro claims the transaction was actually a loan secured by a mortgage, alleging she needed P105,000.00 for her children’s education and agreed to a total indebtedness of P150,000.00 including interest. She asserts she was coerced into signing the deed, which she was told was a mere formality, and that she remained in possession through her tenant, receiving harvest shares until 1995. In 1986, she discovered the property had been transferred to the respondents’ names. After saving money, her attempts to redeem the property were rebuffed, leading her to file suit in 1994 seeking a declaration that the document was an equitable mortgage and for reconveyance.
Respondents Lee and Sison contend the transaction was a bona fide sale. They assert they are real estate investors who negotiated the purchase after learning the property had no right of way, was prone to flooding, and was untenanted. They presented evidence, including a notarized deed of absolute sale and an affidavit of non-tenancy executed by San Pedro, to support their claim of a valid sale. They denied any loan agreement and maintained that the purchase price of P150,000.00 was the fair value agreed upon, given the property’s characteristics.

ISSUE

Whether the “Kasulatan ng Ganap na Bilihan ng Lupa” is an equitable mortgage or a contract of absolute sale.

RULING

The Supreme Court ruled the document is a contract of absolute sale, not an equitable mortgage. The legal logic hinges on the failure of the petitioner to present clear and convincing evidence to rebut the presumption of regularity accorded to a notarized document and to prove the existence of any of the circumstances under Article 1602 of the Civil Code that would characterize a transaction as an equitable mortgage. The Court found San Pedro’s claim of continued possession through a tenant unconvincing, as the tenant’s testimony and documents pertained to a different, smaller parcel of land, not the specific property sold. The affidavit of non-tenancy she executed for the respondents directly contradicted her claim of possession. Furthermore, the Court held that the alleged gross inadequacy of price was not sufficiently proven; the petitioner’s evidence on zonal values was from 1994, not contemporaneous to the 1985 sale, and the respondents’ evidence about the land’s poor conditions provided a plausible justification for the negotiated price. The petitioner’s nine-year delay in asserting her claim also militated against her cause. Consequently, the notarized deed of absolute sale stands as valid.