Redondo v. Jimenez
REITERATIONFacts
The Antecedents: Petitioner Adoracion Redondo and her siblings were co-owners of a residential lot. Adoracion's one-fourth pro indiviso share was sold and conveyed to respondent Angelina Jimenez, evidenced by a notarized Deed of Absolute Sale dated February 17, 1981, for a consideration of ₱3,000. The sale was inscribed in the title on July 5, 1988. Procedural History: Adoracion filed a Complaint for annulment of sale and recovery of ownership with damages, claiming she was deceived into signing the deed of sale, intending only to borrow money, and that the transaction was an equitable mortgage due to gross inadequacy of consideration, her continued payment of realty taxes, her possession, and her financial distress. The RTC dismissed the complaint and ordered Adoracion to pay attorney's fees and litigation expenses. The Court of Appeals affirmed the RTC decision with modification, deleting the award for attorney's fees and litigation expenses. The Petition: Adoracion elevated the case to the Supreme Court, arguing that the Court of Appeals overlooked material circumstances, committed glaring errors contrary to law and jurisprudence, and rendered findings principally grounded on presumptions.
Issue(s)
Whether the transaction between Adoracion and Angelina was an equitable mortgage. Whether the sale was voidable on account of alleged fraud, and if so, whether the action to annul the sale had prescribed.
Ruling
The petition is denied. The assailed Decision and Resolution of the Court of Appeals are affirmed.
Ratio Decidendi
On whether the transaction was an equitable mortgage: The Court found no badges of an equitable mortgage under Article 1602 of the Civil Code. The consideration of ₱3,000 for a 70-square meter share, with a market value of approximately ₱5,640, was not considered grossly inadequate, especially given Adoracion's admission of financial distress. Furthermore, tax receipts clearly showed that Angelina, not Adoracion, had been paying the realty taxes on the property. Adoracion's claim of continuous possession was deemed unsubstantiated and explained by complex family issues, with Angelina tolerating her possession rather than it being a badge of mortgage. The Court concluded that the transaction was a sale, not an equitable mortgage. On whether the sale was voidable due to fraud and prescription: Even if Adoracion's consent was vitiated by fraud, her action to annul the contract was subject to a prescriptive period of four years from the discovery of the fraud. Registration of the deed of sale on July 5, 1988, constituted constructive notice to the world. Therefore, Adoracion's action, filed on November 27, 1992, had prescribed, as the four-year period expired on July 5, 1992. Consequently, it was futile to discuss the presumption of regularity of the notarized deed of sale.
Main Doctrine
The registration of a deed of sale with the Register of Deeds constitutes constructive notice to the world, marking the start of the prescriptive period for filing an action to annul the sale based on fraud.