G.R. No. 165943 November 20, 2007
ELIODORO ALELIGAY, substituted by CEFERINO ALELIGA, petitioner, vs. TEODORICO LASERNA, PRISCILLA VILLAGRACIA and ANGUSTIA VILLAGRACIA, respondents.

FACTS

The case involves a parcel of land originally owned by Anselmo Aleligay and inherited by his heirs, including petitioner Eliodoro Aleligay. Eliodoro claimed that in 1946, he merely mortgaged the property to respondent Teodorico Laserna and retained possession. He alleged he later discovered a forged deed of absolute sale in Laserna’s favor, which Laserna used to subsequently sell the land to respondents Priscilla and Angustia Villagracia. Eliodoro filed a complaint for annulment of the deed, recovery of ownership, and reconveyance.
Respondents presented a contrary version. Laserna asserted he validly purchased the land from Eliodoro and his siblings in 1946, as evidenced by a notarized deed of sale, and took possession thereafter. He later sold the property to the Villagracias in 1969. The Villagracias claimed they were buyers in good faith and had secured an Original Certificate of Title in their names. The Regional Trial Court dismissed Eliodoro’s complaint, a decision affirmed by the Court of Appeals.

ISSUE

The core issues are: (1) Whether the 1946 contract between Eliodoro and Laserna was an equitable mortgage or an absolute sale; and (2) Whether the Villagracias were buyers in good faith.

RULING

The Supreme Court denied the petition, affirming the lower courts. On the first issue, the Court ruled the contract was a sale, not an equitable mortgage. Petitioner’s claim of continuous possession was refuted by overwhelming evidence presented by respondents. This evidence included the notarized deed of sale, which carries the presumption of regularity; an NBI dactyloscopic report confirming the authenticity of the signatures and fingerprints of Eliodoro and other heirs on the deed; a joint affidavit executed by Eliodoro himself attesting to Laserna’s possession; a lease contract showing Laserna leased the property to a third party; and tax declarations in Laserna’s name. These facts collectively negated the indicators of an equitable mortgage under Article 1602 of the Civil Code.
On the second issue, the Court found the question of the Villagracias’ good faith to be a non-issue. Since the 1946 deed was conclusively established as a valid sale, Laserna became the rightful owner and had the capacity to transmit title. The subsequent sale to the Villagracias was therefore valid. Good faith is always presumed, and petitioner failed to present convincing evidence to rebut this presumption. Consequently, the Villagracias’ acquisition of title was upheld.