Felimon Uy v. The Court of Appeals

Summary

This case involved a dispute over whether a Deed of Absolute Sale executed by Maria del Rosario-Tanjuakio in favor of Felimon Uy for P70,000.00 should be treated as an equitable mortgage. The Supreme Court affirmed the Court of Appeals' finding that the transaction was indeed an equitable mortgage rather than a true sale, based on several circumstances under Article 1602 of the Civil Code: the inadequate purchase price for a 420-square meter property in Quezon City, the vendor's continued possession, her payment of real estate taxes until 1982, and testimonial evidence that the deed did not express the true intention of the parties. The Court applied Civil Code principles on equitable mortgages and contract interpretation, emphasizing that in case of doubt, the interpretation favoring the greatest reciprocity of interests should prevail. The decision demonstrates the protective nature of equitable mortgage provisions in preventing unconscionable transactions disguised as absolute sales.