Velasco v. Buenviaje
REITERATIONFacts
The Antecedents: The dispute centers on Lot 252-A, a 217 sq. m. parcel in Albay, Bicol, part of the larger Lot 252 (792 sq. m.), covered by TCT No. 29617 in the name of respondents Felipe R. Buenviaje and Angelina Milan-Buenviaje (Buenviajes). Petitioners Thelma Casulla Velasco and Myrna Casulla vda. de Retuerma (Casullas), daughters of deceased Felipe Casulla, claim hereditary succession entitled their father to a 199 sq. m. undivided share in Lot 252 per cancelled TCT No. 1026 listing him as co-owner. Prior to 1952, Felipe built a two-storey family home on the property, which passed to petitioners upon his death, and they have maintained joint possession since. Felipe allegedly borrowed P1,800 from Joaquin Buenviaje (Buenviajes' father), securing it with a May 1952 document purportedly a Deed of Mortgage but actually titled Deed of Sale, signed under assurance it was merely security; petitioners remained in possession post-execution. They assert the property's current value exceeds P6,000,000, evidencing intent to mortgage rather than sell due to price disparity. Buenviajes counter as registered owners, claiming Casullas' possession is by mere tolerance. Procedural History: Barangay conciliation failed; Buenviajes filed Civil Case No. 9528 for quieting of title against Casullas and Guillermo Navarro in RTC Branch 10, Legazpi City (1998). Pretrial appointed Engr. Lorenzana and Engr. Matriz, whose reports confirmed Casullas occupy 146 sq. m. with low-cost improvements valued at P58,000 (house) plus undeclared stall/garage, Navarro 71 sq. m. (P70,000), and Lot 252-A under Buenviajes' TCT No. 29617 assessed at ARP No. 0165. RTC Decision (27 January 2006) declared Buenviajes owners entitled to possession, ordered vacation and removal of improvements. CA (Special Eighth Division) affirmed via Decision (28 December 2007) and Resolution denying MR (10 March 2008), upholding title, possession as tolerant, and lack of equitable mortgage proof. The Petition: Casullas petition under Rule 45, assigning grave abuse by CA in affirming quieting of title and ignoring equitable mortgage indicators: (a) P1,800 loans vs. P6M value (inadequacy); (b) continuous possession since pre-1952; (c) tax payments; claiming Deed was mortgage in essence per Art. 1602. They invoke TCT 1026 for co-ownership and assert subdivision ignored hereditary rights.
Issue(s)
Whether the transaction was an equitable mortgage under Articles 1602 and 1604, entitling petitioners to ownership/possession of 199 sq. m., despite respondents' Torrens title.
Ruling
The Petition is DENIED. The CA Decision (28 December 2007) and Resolution (10 March 2008) in CA-G.R. CV No. 87280 are AFFIRMED, declaring Buenviajes owners entitled to possession and ordering petitioners and Navarro to vacate and remove improvements.
Ratio Decidendi
On Issue 1: The Court ruled none exists, as petitioners failed to prove Art. 1602 circumstances despite bare claims. Critically, they never offered the alleged Deed of Sale/Mortgage in evidence, leaving no basis to evaluate terms or intent, dooming their assertions ab initio. Art. 1602 presumes equitable mortgage upon proof of: (1) inadequate price; (2) vendor possession; (3) extension instruments; (4) retained price portion; (5) vendor tax payments; or (6) inferred debt-security intent; extending to absolute sales per Art. 1604. On inadequacy, no evidence supports P6M 1952 value; lone proof (1997 assessment: P199,640 adjusted market) contradicts, and absent deed, P1,800 sale price unproven. Continued possession undisputed but irrelevant, as RTC/CA ruled it unauthorized/tolerant against Buenviajes' clean TCT 29617 post-subdivision of Lot 252; cancelled TCT 1026 (co-ownership) proves no current right, with trial facts (146 sq. m. occupation) binding per Republic v. RTC (G.R. No. 172931). Tax receipts show payments only on improvements (house ARP 0175), not land (Buenviajes' ARP 0165), failing that requisite. Thus, no presumption arises; Buenviajes' title prevails in quieting action.
Main Doctrine
The provisions of Article 1602 of the Civil Code create a legal presumption that a contract is an equitable mortgage when specific circumstances are present, such as unusually inadequate purchase price, vendor's continued possession, or other indicators that the true intent was to secure a debt. This presumption extends to contracts purporting to be absolute sales under Article 1604, treating any benefits received by the vendee as interest subject to usury laws. However, invocation of this presumption demands concrete evidentiary support; bare allegations without the document itself or proof of the enumerated requisites fail to shift the burden. Continued possession by the vendor does not trigger the presumption if lower courts have ruled it tolerant or unauthorized, especially against a clean Torrens title in the purchaser's name. Payment of taxes on improvements alone does not equate to land tax payments by the vendor, negating that circumstance. Factual findings by trial courts, affirmed by appellate courts, regarding title validity, possession nature, and property value are binding on the Supreme Court absent grave abuse.