G.R. No. 155856, 28 May 2004


Leonora Emparado Ceballos is the registered owner of a certain parcel of land (Lot No. 3353, Pls-657-D) situated in Bato, Badian, Cebu, consisting of 53,301 square meters and covered by Transfer Certificate of Title No. T-948 of the Register of Deeds for the Province of Cebu. Sometime in October 1980, [petitioner] was introduced to Emigdio Mercado for the purpose of obtaining a loan as the latter was also known to be in the business of lending money.

[Petitioner] was able to borrow the amount of ₱12,000.00 payable in two (2) months and to secure said loan, she executed in favor of Emigdio Mercado a ‘Deed of Real Estate Mortgage’ over the subject property. The said mortgage deed was not registered by the mortgagee. [Petitioner] was not able to pay her mortgage indebtedness to Emigdio Mercado within the stipulated period. On February 13, 1982, a ‘Deed of Absolute Sale’ was executed whereby the mortgaged property was sold to Emigdio Mercado for the price of ₱16,500.00.

Said instrument contained the signatures of [petitioner] and her husband Narciso Ceballos and notarized by Atty. Elias V. Ortiz. It appears that sometime in 1990, [petitioner] offered to buy back the property from Emigdio Mercado for the price of ₱30,000.00 but the latter’s wife refused since the same was already transferred in their names under TCT No. TF-3252 issued on June 1, 1987. Emigdio Mercado died on January 12, 1991 and a petition for the issuance of letters of administration over his intestate estate was filed by her daughter Thelma M. Aranas before the RTC-Cebu City, Branch 11 (Spec. Proc. No. 3094-CEB).

On August 18, 1990, [petitioner] instituted the present suit against the Intestate Estate of the Late Emigdio Mercado, Teresita Mercado as the Administrator, and/or the Heirs of the Late Emigdio Mercado. The Complaint alleged the following:

[Petitioner] is the owner as her paraphernal property of a parcel of land located at Barangay Bato, Municipality of Badian, Province of Cebu and covered by TCT No. T-948, the same being her hereditary share from the property of her late father Rufo Emparado. Sometime in the early part of December 1980, to accommodate a friend who was hospitalized, [petitioner] went to the late Emigdio Mercado, who was known, besides his other businesses, to be also in the business of lending money, although at exorbitant rate of interest.

A Real Estate Mortgage was drawn on December 31, 1980 for ₱12,000.00 although only ₱8,000.00 was actually delivered, the difference represents the interest for the use of money, for a period of two (2) months. Since the accommodated party could not yet produce the redemption money, [petitioner] periodically went to the mortgagee to beg him not to foreclose the mortgage.

On February 13, 1982, [petitioner] was made to execute a ‘Deed of Sale with Pacto de Retro’ for an increased consideration, from ₱12,000.00 to ₱16,500.00 for a period of one (1) year from date of execution thereof, which contract was in fact an equitable mortgage. [Petitioner] religiously paid interest on the loan even beyond the term of the mortgage, on the repeated request by [petitioner] to the deceased mortgagee not to foreclose the mortgage. [Petitioner] learned to engage in the buy and sell of just any commodity, more especially real estate, and her income improved.

In November 1990, she went to the deceased mortgagee to redeem the property to which the latter agreed but the wife, Teresita Virtucio-Mercado vehemently objected saying that it could no longer be done because the title had been transferred in their names. [Petitioner] waited for a propitious time to again propose to redeem the property since it was a matter of convincing by the deceased mortgagee for his wife to agree to the redemption, when she learned of his death on January 12, 1991.

[Petitioner] then started her epic to recover the property; she engaged in gathering documentation when to her great worry and apprehension she discovered that the title to the property had indeed been transferred in the name of the deceased Emigdio S. Mercado under TCT No. TF-3252. Such transfer of title was based on a document, ‘Deed of Absolute Sale,’ purportedly executed by [petitioner] and her husband on February 13, 1982, the same date when deceased Emigdio Mercado and [petitioner] executed the ‘Deed of Sale With Pacto de Retro’ and for the same consideration of ₱16,500.00, the latter document turned out not to have been submitted by the deceased for notarization. Said ‘Deed of Absolute Sale’ is an absolute fabrication with the signatures therein appearing to have been of the [petitioner’s] and husband’s, were absolute forgeries.

[Petitioner] submitted said deed of sale to disinterested third parties to confirm its being spurious; she sought the assistance of the Philippine National Police (PNP) which found (PNP Report No. 097-91) that said document of sale is a forgery; and hence, it is patent that the transfer of title on the property was done through fraud.

[Petitioner] is willing and ready to redeem the property and there is no other way for her to recover her property but through the courts. [Petitioner] thus prayed for a judgment (1) declaring the ‘Deed of Absolute Sale’ void from the beginning; (2) to allow [petitioner] to redeem her property; (3) ordering defendant, after redemption, to reconvey the property to [petitioner]; (4) ordering defendant to reimburse [petitioner] attorney’s fees of ₱50,000.00 and litigation expenses of ₱10,000.00, and to pay moral damages in the sum of ₱100,000.00.


Whether or not the contract should be treated as one of equitable mortgage?



Concededly, the original transaction was a loan. Petitioner failed to pay the loan; consequently, the parties entered into another agreement — the assailed, duly notarized Deed of Absolute Sale, which superseded the loan document. Petitioner had the burden of proving that she did not intend to sell the property; that Emigdio Mercado did not intend to buy it; and that the new agreement did not embody the true intention of the parties. We find no basis for disturbing the CA’s finding that she had failed to discharge this burden.

Harping on the alleged unconscionably low selling price of the subject land, petitioner points out that it is located in a tourist area and golf haven in Cebu. Notably, she has failed to prove that on February 13, 1982, the date of the sale, the area was already the tourist spot and golf haven that she describes it to be. In 1990, the property might have been worth ten million pesos, as she claimed; however, at the time of the sale, the area was still undeveloped. Hence, her contention that the selling price was unconscionably low lacks sufficient substantiation.

Petitioner also argues that Mercado’s delay in registering the Deed of Absolute Sale and transferring the land title shows that the real agreement was an equitable mortgage.

An equitable mortgage is one that — although lacking in some formality, form or words, or other requisites demanded by a statute — nevertheless reveals the intention of the parties to charge a real property as security for a debt and contains nothing impossible or contrary to law. Delay in transferring title is not one of the instances enumerated by law — instances in which an equitable mortgage can be presumed. Moreover, throughout the testimony of petitioner before the trial court, she never claimed that after the Deed of Absolute Sale had been executed in February 13, 1982, the land continued to be intended merely to secure payment of the ₱12,000 loan taken on December 31, 1980.

This Court has held that a document acknowledged before a notary public enjoys the presumption of regularity. It is a prima facie evidence of the facts therein stated. To overcome this presumption, there must be presented evidence which is clear and convincing. Absent such evidence, the presumption must be upheld.

In this case, petitioner failed to present clear and convincing evidence to overcome the presumption of validity of the notarized Deed conveying the land to private respondents. Her testimony denying the validity of the sale, having been “made by a party who has an interest in the outcome of the case, is not as reliable as written or documentary evidence. Moreover, self-serving statements are inadequate to establish one’s claims. Proof must be presented to support the same.”

*Case digest by Mary Tweetie Antonette G. Semprun, JD – IV, Andres Bonifacio College, SY 2019 – 2020