Mariano M. Lazatin v. The Hon. Court of Appeals

Summary

The Supreme Court affirmed that two property transactions between the Umalis and Lazatin were equitable mortgages, not absolute sales. Despite deeds of sale stating considerations of P40,000 and P150,000, the Umalis received only P25,000 and P75,000 respectively. The Court applied Articles 1602 and 1604 of the Civil Code, finding four key indicators of equitable mortgage: inadequate purchase prices (building alone cost P400,000-P450,000), vendor remained in possession since 1967, vendor continued paying taxes, and vendor paid interest on the amounts received. The Court ordered annulment of the deeds of sale, cancellation of certificates of title issued to Lazatin, reinstatement of original titles, and gave Umalis 90 days to redeem the properties by paying the actual loan amounts. This case demonstrates how courts will look beyond the form of documents to determine the true intention of parties in property transactions.