- Petitioner
- Benny Go
- Respondent
- Eliodoro Bacaron
- Citation
- G.R. No. 159048
- Court
- Supreme Court
- Division
- Third Division
- Ponente
- Panganiban, J.
- Decided
- October 11, 2005
Summary
This case involved a dispute over whether a 'Transfer of Rights' contract for a 15.3955-hectare property in Davao City was an absolute sale or equitable mortgage. Respondent Bacaron claimed he mortgaged the land to secure a P20,000.00 loan from petitioner Go, while Go insisted it was an absolute sale to settle Bacaron's debts of nearly one million pesos. The Regional Trial Court initially ruled for Go, finding it was an absolute sale. However, the Court of Appeals and Supreme Court reversed, applying Article 1602 of the Civil Code on equitable mortgages. The Supreme Court found three key indicators: grossly inadequate consideration (P20,000.00 for valuable land), continued possession by Bacaron (harvesting crops, supervising workers), and Bacaron's continued payment of real estate taxes. The Court ruled that the true intention was to create security for a debt, not transfer ownership, and ordered reformation of the contract to reflect its true nature as an equitable mortgage. This case demonstrates the application of Civil Code provisions protecting parties from disguised mortgage transactions.