G.R. No. 96412 August 24, 1998
ANICETA RAMIREZ, AGUSTIN RAMIREZ, JR., LORNA RAMIREZ, NESTOR RAMIREZ, ROMEO RAMIREZ, CHITO RAMIREZ, PANCHO RAMIREZ, MARLON RAMIREZ, OSCAR RAMIREZ, SPOUSES VICENTE AND BALDOMERA ANIÑON, AND SPOUSES ELMER AND BENG TEE SUNBANUM, petitioners, vs. THE COURT OF APPEALS and SPOUSES BENEDICTO AND EVANGELINE RAMOS, respondents.

FACTS

The case involves two Deeds of Sale over the same parcel of land. The first Deed of Sale was executed on December 18, 1965 by spouses Agustin and Aniceta Ramirez in favor of Maria vda. de Ramos for P28,000.00. Maria took possession but the title was not transferred. Upon Maria’s death on April 7, 1974, her son Benedicto Ramos inherited the property. On March 25, 1977, Benedicto Ramos executed a second Deed of Sale, a “Settlement and Extrajudicial Adjudication… with Simultaneous Sale,” conveying the same property to Vicente Aniñon for P20,000.00. After Agustin Ramirez died on December 29, 1982, his heirs (Aniceta and their children) adjudicated the same property to themselves and sold it to spouses Vicente and Baldomera Aniñon on December 20, 1984 for P95,000.00. The Aniñons then sold it to spouses Elmer and Beng Tee Sunbanum, in whose names a new title was issued. Benedicto and Evangeline Ramos filed a Complaint for Quieting of Title, Annulment of Sale, etc., assailing the transfers from the Ramirez heirs to the Aniñons and Sunbanums. The petitioners (Ramirez heirs, Aniñons, Sunbanums) argued the first sale was never consummated due to non-payment of the full price, and that the Ramos spouses had no cause of action as Benedicto had already sold the property to Aniñon. The private respondents (Ramos spouses) countered in their Reply that the second sale (Ramos to Aniñon) was not a true sale but an equitable mortgage to secure a debt. The trial court granted the petitioners’ Motion to Dismiss, ruling the respondents failed to deny under oath the genuineness of the Deed of Sale to Aniñon. The Court of Appeals reversed the trial court, declaring the Ramos-to-Aniñon deed as an equitable mortgage, nullifying the Ramirez heirs-to-Aniñon sale, and ordering the restoration of title to the Ramos spouses upon payment of P20,000.00 to Aniñon.

ISSUE

1. Whether the first sale (Ramirez to Maria vda. de Ramos) was valid or flawed due to alleged non-payment.
2. Whether the second sale (Ramos to Aniñon) was an absolute sale or an equitable mortgage.
3. Whether the Court of Appeals erred in reversing the trial court’s dismissal of the complaint.

RULING

The Supreme Court AFFIRMED the Decision of the Court of Appeals.
1. The Court found no reversible error in the Court of Appeals’ factual findings upholding the validity of the first sale. The petitioners’ claim of non-payment was not substantiated. The letter from Aniceta Ramirez’s lawyer stating the full price was not paid was written after Maria’s death, and there was no evidence of rescission or the exact unpaid balance. The demand for the title by Ramos indicated a lack of knowledge of any flaw.
2. The Court agreed with the Court of Appeals that the second deed (Ramos to Aniñon) was an equitable mortgage under Article 1602 of the Civil Code. The indicia included: the grossly inadequate price (P20,000.00 in 1977 compared to P95,000.00 in 1984), and the vendor Benedicto Ramos remained in possession of the property after the 1977 deed. Furthermore, in an ejectment case, Ramos categorically stated the deed was to secure a debt. The subsequent purchase of the same property by Aniñon from the Ramirez heirs in 1984 reinforced the conclusion that the 1977 transaction was not an absolute sale.
3. Consequently, the Court found no error in the Court of Appeals’ reversal. Since the 1977 transaction was an equitable mortgage, Benedicto Ramos remained the owner. Therefore, the subsequent sale by the Ramirez heirs to Aniñon in 1984 was null and void, as they had no ownership to convey.