Spouses Crispin Austria v. Spouses Danilo Gonzales, Jr.

Summary

Spouses Austria filed suit claiming their transaction with spouses Gonzales was an equitable mortgage, not a sale, seeking reconveyance of three parcels of land. The RTC agreed, finding indicators of equitable mortgage under Civil Code Articles 1602 and 1604. However, the Court of Appeals reversed, and the Supreme Court affirmed, ruling the transaction was indeed an absolute sale. The Court emphasized that intent of parties governs, and despite some equitable mortgage indicators, compelling evidence including petitioners' own letter using sale terminology and mentioning capital gains tax, their undertaking to vacate, and failure to object to improvements, proved the parties intended a sale. The case demonstrates that presumptions under Article 1602 can be rebutted by satisfactory contrary evidence showing true intent.