This Supreme Court decision affirms the validity of a deed of sale against claims that it was merely an equitable mortgage. The Court emphasized the importance of proving such claims with convincing evidence and upheld the rights of subsequent purchasers who acted in good faith. The ruling clarifies the burden of proof in disputes over property ownership and the enforceability of notarized documents.

Burden of Proof: Can a Claim of Equitable Mortgage Overturn a Deed of Sale?

This case revolves around a parcel of land in Capiz, originally owned by Anselmo Aleligay, and the dispute that arose decades after its alleged sale. Eliodoro Aleligay, one of Anselmo’s heirs, claimed that a 1946 deed of sale to Teodorico Laserna was not an actual sale but an equitable mortgage, a disguised loan secured by the property. He argued that he retained possession of the land and that his signature on the deed was forged. Laserna, however, asserted that he bought the property legitimately and later sold it to Priscilla and Angustia Villagracia, who secured an Original Certificate of Title (OCT) in their name. The central legal question is whether Eliodoro could successfully prove that the deed of sale was, in fact, an equitable mortgage, thereby invalidating the subsequent sale to the Villagracias.

The Regional Trial Court (RTC) dismissed Eliodoro’s complaint, a decision affirmed by the Court of Appeals. The appellate court underscored the validity of the Deed of Absolute Sale between Laserna and the Villagracias. Eliodoro, substituted by his son Ceferino after his death, then elevated the case to the Supreme Court, questioning whether the initial transaction with Laserna was a mortgage and whether the Villagracias were buyers in good faith. The Supreme Court’s analysis hinged on whether the evidence presented by Eliodoro met the burden of proof required to overturn a notarized deed of sale.

Eliodoro argued that his continued possession of the land since 1946 indicated that the transaction was a mortgage. He claimed that if it had been a genuine sale, Laserna would have taken possession. However, the Court found this argument unconvincing. Laserna presented evidence that he occupied the land after the sale, declared it for taxation purposes, and even leased it to a third party. A joint affidavit by Eliodoro himself, along with an adjoining landowner, attested to Laserna’s possession. Most crucially, a Dactyloscopic Report from the National Bureau of Investigation (NBI) confirmed the authenticity of Eliodoro’s signature and the fingerprints of other heirs on the deed of sale.

The Supreme Court referred to Article 1602 of the Civil Code, which outlines instances where a contract, regardless of its designation, may be presumed to be an equitable mortgage. These include situations where the price is inadequate, the vendor remains in possession, or the vendor pays the taxes on the property. The Court noted that neither the trial nor appellate courts found any of these circumstances present in this case. The burden of proof, as the Court reiterated, lies with the plaintiff, in this case, Eliodoro, to establish his claim by a preponderance of evidence. Failing to do so would result in the dismissal of his case, according to the principle “Actori incumbit onus probandi”.

The Court emphasized that the deed of sale, being a notarized document, carries significant evidentiary weight. Such documents are entitled to full faith and credit on their face, a legal principle that reinforces the reliability of notarized transactions. Moreover, none of Eliodoro’s co-heirs appeared in court to deny their signatures on the deed, further undermining his claim. The NBI report confirming the signatures was a critical piece of evidence that supported the authenticity of the sale.

The Court also addressed the issue of good faith on the part of the Villagracias. It stated that good faith is always presumed unless there is convincing evidence to the contrary. Eliodoro failed to provide such evidence, and therefore, the presumption of good faith remained in favor of the Villagracias. Ultimately, the Court deemed the issue of good faith a non-issue, as Eliodoro’s primary contention—that the initial transaction was an equitable mortgage—lacked sufficient support.

The Supreme Court ultimately denied the petition, affirming the decisions of the lower courts. The Court found that Eliodoro failed to provide sufficient evidence to overturn the validity of the deed of sale. The ruling underscores the importance of upholding duly executed and notarized documents and the need for plaintiffs to substantiate their claims with credible evidence. The decision also highlights the legal presumption of good faith in property transactions, which can only be overcome with compelling proof to the contrary.

FAQs

What was the key issue in this case?	The key issue was whether a deed of sale could be declared an equitable mortgage based on the claimant’s assertion of continued possession and allegations of forgery, despite the deed being notarized.
What is an equitable mortgage?	An equitable mortgage is a transaction that appears to be a sale but is actually intended as a security for a debt. Article 1602 of the Civil Code lists circumstances under which a sale may be presumed to be an equitable mortgage.
What is the significance of a notarized document?	A notarized document carries the evidentiary weight conferred by law, entitling it to full faith and credit on its face. This means it is presumed to be valid and authentic unless proven otherwise.
What does “Actori incumbit onus probandi” mean?	“Actori incumbit onus probandi” is a Latin legal maxim that means the burden of proof lies with the plaintiff. In a civil case, the plaintiff must establish their case by a preponderance of evidence.
What evidence did the respondents present to support their claim?	The respondents presented a notarized deed of sale, tax declarations, a joint affidavit from the petitioner attesting to their possession, a lease contract with a third party, and a Dactyloscopic Report confirming the petitioner’s signature on the deed.
What was the role of the NBI report in the case?	The NBI’s Dactyloscopic Report was crucial as it confirmed the genuineness and authenticity of Eliodoro’s signature and the fingerprints of other heirs on the questioned Deed of Sale, disproving the forgery claim.
What does it mean to be a buyer in good faith?	A buyer in good faith is someone who purchases property without knowledge of any defect or encumbrance on the seller’s title. Good faith is presumed unless proven otherwise.
What was the court’s ruling on the issue of good faith?	The court ruled that Eliodoro failed to provide sufficient evidence to overcome the presumption of good faith in favor of the Villagracias, rendering the issue a non-issue.

This case underscores the importance of clear documentation and the need to promptly address property disputes. It serves as a reminder that claims of equitable mortgage must be supported by substantial evidence to overcome the presumption of validity afforded to notarized deeds. The ruling reinforces the stability of property transactions and the reliance on established legal principles in resolving ownership conflicts.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: ELIODORO ALELIGAY VS. TEODORICO LASERNA, G.R. No. 165943, November 20, 2007