Cando v. Solis

 

Cando v. Solis

G.R. No. 251792

February 27, 2023

 

FACTS:

                Spouses Solis were the registered owners of two parcels of land located in Quezon City and covered by Transfer Certificates of Title. Spouses Solis borrowed P15,000,000.00 from Cando and executed a Real Estate Mortgage covering the subject properties. A year later, Spouses Solis received a demand letter from Cando's counsel stating that the former already sold the subject properties to Cando, but they refused to vacate the premises. Petitioners allege that they signed the document out of mistake and out of belief that the document was a real estate mortgage and not a sale. Thus, Spouses Solis filed a complaint for annulment of sale with reformation of instrument and damages against Cando. Spouses Solis maintained that the deed of mortgage did not disclose their true intent because their transaction with Cando was one of mortgage and not the sale and that the document was null and void for being a pactum commissorium.

 

ISSUE:

                Whether or not the agreement between Spouses Solis and Cando is one of equitable mortgage that warrants the annulment of the deed of sale they supposedly entered into.

 

HELD:

                An equitable mortgage is defined as one which, although lacking in some formality, or form or words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real property as security for a debt, and contains nothing impossible or contrary to law. The intention of the parties to an agreement is determined not only by the terminology used in the document but also by all the surrounding circumstances that would show the real nature of their understanding. For the presumption of an equitable mortgage to arise under Article 1602, two (2) requisites must concur: (a) that the parties entered into a contract denominated as a contract of sale; and (b) that their intention was to secure an existing debt by way of a mortgage. The requisites for the presumption of an equitable mortgage to arise under Article 1602 are present in the case: (a) Spouses Solis and Cando entered into a contract of sale dated October 29, 2012 and (b) the circumstances show that they executed the contract to guarantee the loan amounting to P15,000,000.00. Verily, the facts and evidence in the case show that the true intent of the parties was to secure the payment of the loan and not to transfer the ownership of the subject properties in favor of Cando. The presence of the foregoing badges thus creates a strong presumption of the existence of an equitable mortgage in the case. The Court finds that the deed of sale entered into by the parties is indeed an equitable mortgage.