ALEXANDER and JEAN J. BACUNGAN, petitioners, vs. COURT OF APPEALS and SPS. NAPOLEON and VICTORIA VELO, respondents.

G.R. No. 170282, December 18, 2008 FACTS: Respondents Napoleon and Victoria Velo were the alleged registered owners of 18 parcels of land situated in Rosales, Pangasinan. Sometime in February 1993 they had experienced business reversals and financial difficulties and had sought assistance from petitioners Bacungan in securing a loan. Petitioners allegedly proposed that they would obtain the loan from the bank provided that respondents secure the transfer of the titles to petitioners that would be used as security for the loan. Thereafter, respondents agreed to the condition of the petitioner. They executed the corresponding deeds of sale and caused the cancellation and issuance of new TCTs over the properties in favor of petitioners. However, respondents claimed that after petitioners had obtained the new titles, they never applied for a loan with the bank but had secretly negotiated for the sale of the properties to third parties. On the other hand, petitioners asserted that respondents offered to sell to them 23 parcels of land, 18 of which were used as collateral for the loan respondents had obtained from Traders Royal Bank. They claimed to have bought 22 parcels of land and executed the corresponding deeds of sale on 26 February 1993 and 10 March 1993. They also allegedly paid in full respondents obligation with said bank but only 18 certificates of title released by the bank were delivered to petitioners. Petitioners further maintained that out of their gratuitousness, they returned one of the deeds of sale to respondents and considered the sale as cancelled. They averred that the amounts they paid to respondents, as well as their payments to the bank, were more than enough as consideration of the 23 contracts. Subsequently, respondents instituted an action for reconveyance with damages against petitioners Alexander and Jean Jimeno Bacungan before the RTC of Rosales, Pangasinan. The RTC dismissed the complaint due to lack of merit. Upon appeal, the CA reversed the decision of the lower court. ISSUE: 1. WON the sale is void due to gross inadequacy of price 2. WON the contract of sale should be nullified HELD: 1. NO. Gross inadequacy of price by itself will not result in a void contract. Gross inadequacy of price does not even affect the validity of a contract of sale, unless it signifies a defect in the consent or that the parties actually intended a donation or some other contract. Inadequacy of cause will not invalidate a contract unless there has been fraud, mistake or undue influence.

2. YES. The contract is a deed of equitable mortgage and not a deed of sale. Thiskind of arrangement, where the ownership of the land is supposedly transferred to thebuyer who provides for the funds to redeem the property from the bank but nonethelessallows the seller to later on buy back the properties, is in the nature of an equitablemortgage governed by Articles 1602 and 1604 of the Civil Code. For a presumption of an equitable mortgage to arise, two requisites must be satisfied: a) that the partiesentered into a contract denominated as a contract of sale, b.) and that their intentionwas to secure an existing debt by way of mortgage. In the instant case, three telling circumstances indicating that an equitable mortgage exists are present. First, as established by the CA, the price of each of the properties was grossly inadequate. Second, petitioners retained part of the "purchase price" when they failed to turn over to the respondents the loan that they were supposed to secure from the bank. Third, petitioners insisted that part of the consideration of the sale consisted of amounts previously borrowed by respondents from them, indicating that petitioners were using the properties as "security" for the payment of respondents other loans from them.

MARY ANN DEHEZA-INAMARGA, petitioner, vs.CELENIA C. ALANO, BERNALDA A. PAROHINOG, GODOFREDO ALANO, AVELINO ALANO, ESTRELLA ALANO, FORTUNATA ALANO, NANY ALANO, SALLY ALANO, ADIONITO ALANO, and SUFRONIA ALANO, respondents. G.R. No. 171321, December 18, 2008 FACTS: Tomas Alano was the owner of two parcels of land which he mortgaged in favor of Renato Gepty. The latter demanded the payment of the loan. However, Tomas did not have money at that time to redeem his properties so he sought help from his niece, petitioner Mary Ann Deheza-Inamarga. Petitioner agreed to pay the loan while the spouses, in turn, mortgaged said properties to her. Petitioner kept possession of the title and asked the spouses to sign blank pieces of paper which petitioner said will be converted into receipts evidencing their indebtedness to her. After the death of Tomas, respondents Celenia together with her children children went to petitioner to redeem the property. However, petitioner told them that she had mortgaged the property to the Rural Bank of Libacao. Respondents learned that the TCTs in petitioners favor were issued by virtue of a Deed of Sale purportedly executed by the Spouses Alano in her favor. Respondents filed a complaint for the declaration of nullity of document, reconveyance and damages against petitioner and the Rural Bank of Libacao. Respondents contended that the deed of sale is null and void because the signatures of the Spouses Alano were forged and even if they were the signatures of the spouses, they were affixed on blank sheets of paper which were not intended to be a deed of sale. On the other hand, petitioner denied the allegation of forgery and maintained that the deed of sale was valid. She claimed that the spouses offered to sell her the property so they can use the purchase price of P7,000 to redeem the property from Gepty. Petitioner added that the action is barred by prescription, laches and estoppel. The RTC declared that the transaction between the plaintiffs and defendant Mary Ann Deheza as an EQUITABLE MORTGAGE and declaring the plaintiffs entitled to redeem the mortgaged properties which shall be effected upon payment of the mortgage debt. It further ordered to declare the nullity of the deed of sale. Upon appeal, the CA affirmed the decision of the trial court. ISSUE: 1. WON the Deed of Sale is a forgery; 2. WON whether the transaction between petitioner and the Spouses Alano is one of an equitable mortgage HELD: 1. YES. The Court of Appeals cited apparent differences in the signatures on the face of the documentary evidence submitted before the RTC. Also, it found that the signatures on the deed of sale appeared to be different in characteristics, spacing and strokes from the signatures of the Spouses Alano appearing in other documents forming part of the records of this case which are admittedly genuine. The presentation of a handwriting expert is not necessary. The signatures on a questioned document can be examined visually by a judge who can and should exercise independent judgment on the issue of authenticity of such signatures. 2. YES. An equitable mortgage is 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 manifestatations of an equitable mortgage in this case are the following: the inadequacy of the selling price of the properties in relation to its true value; the vendors (Spouses Alano) remained in possession as lessee or otherwise; respondents paid the real property taxes; and the spouses secured the payment of the principal debt owed to petitioner with said properties.