Flordeliz L. Bellido v. The Hon. Court of Appeals

Summary

The Supreme Court reversed lower courts and declared that a deed of absolute sale executed by financially distressed spouses should be treated as an equitable mortgage. Despite the formal absolute sale of property worth P900,000-P950,000 for P300,000, the Court found the transaction was actually a secured loan based on surrounding circumstances: the sellers' financial distress, inadequate consideration, use of sale proceeds to redeem the same property from a previous creditor, and the buyers' requirement of executing the deed before releasing loan funds. Applying Civil Code Articles 1602 and 1604, the Court nullified the sale and ordered restoration of the original title, establishing important precedent for distinguishing genuine sales from disguised mortgage transactions.