Aguirre v. Tupas
REITERATIONFacts
The Antecedents: Petitioner Estelita Aguirre and private respondent Teofista S. Tupas entered into a Deed of Absolute Sale for a parcel of land in Boracay Island. Petitioner took possession immediately. Subsequently, petitioner filed a Complaint for Quieting of Title and/or Recovery of Possession with Damages against the spouses Privado and Teofista Tupas, claiming disturbance in possession. Other private respondents intervened as co-owners. Procedural History: The Regional Trial Court (RTC) dismissed the Complaint, finding the contract to be an equitable mortgage, not a sale. The Court of Appeals (CA) affirmed the RTC's Decision. The denial of petitioner's Motion for Reconsideration led to the present petition. The Petition: Petitioner seeks review of the CA's affirmation of the RTC's finding that the transaction was an equitable mortgage, arguing that the Deed of Sale was executed regularly, that an heir can alienate her inheritance without consent of co-heirs, and that the transaction was a sale, not an equitable mortgage, as none of the circumstances in Article 1602 of the Civil Code were present.
Issue(s)
Whether the Court of Appeals committed grave error in affirming the trial court's finding that the execution of the Deed of Sale was highly irregular. Whether an heir can alienate her share of the inheritance without the conformity of her other co-heirs. Whether the transaction between the parties was a sale or an equitable mortgage.
Ruling
The Petition is denied. The Decision of the Court of Appeals is affirmed in toto.
Ratio Decidendi
On the alleged irregularity of the Deed of Sale: The Court reiterated the settled jurisprudence that the clarity of contract terms and the name given to it do not preclude courts from determining the true intent of the parties. The decisive factor is the intention of the parties, as shown not only by the contract's terminology but also by their conduct, words, actions, and deeds prior to, during, and immediately after executing the agreement. Documentary and parol evidence may be admitted to prove such intention. On the alienation of inheritance by an heir: While not directly ruled upon as a primary issue, the Court's affirmation of the equitable mortgage finding implicitly addresses this by focusing on the true nature of the transaction as security for a debt, rather than a definitive alienation of ownership by an heir. On whether the transaction was a sale or an equitable mortgage: The Court found that the transaction qualified as an equitable mortgage under Article 1602(6) of the Civil Code. This was based on several circumstances: private respondents' continued possession and occupation of a portion of the land (building cottages, operating a store, growing plants) without demand to vacate or payment of rent; the ten-year period given to petitioner to occupy the land, interpreted as the period for the mortgagors to pay their indebtedness; private respondents' continued payment of taxes on the land even after the supposed sale; and the execution of a Sworn Statement by Teofista Tupas including the subject land as an asset more than a year after the transaction. The Court emphasized that the presence of even one circumstance under Article 1602 is sufficient to presume an equitable mortgage, and Article 1604 extends this to contracts purporting to be absolute sales.
Main Doctrine
A contract purporting to be an absolute sale may be presumed to be an equitable mortgage if any of the circumstances enumerated under Article 1602 of the Civil Code is present, particularly when it can be fairly inferred that the real intention of the parties is for the transaction to secure the payment of a debt or the performance of an obligation.