G.R. No. 161479 ; October 18, 2007
ADORACION REDONDO, Petitioner, vs. ANGELINA JIMENEZ, Respondent.

FACTS

Petitioner Adoracion Redondo, a co-owner of a residential lot in Cavite, sold her one-fourth pro indiviso share to respondent Angelina Jimenez, her sister-in-law, through a notarized Deed of Absolute Sale dated February 17, 1981, for P3,000. The sale was registered on July 5, 1988. In 1992, Adoracion filed a complaint for annulment of sale, claiming she was deceived into signing the document when she only intended to secure a loan, and that the transaction was an equitable mortgage. She cited grossly inadequate consideration, her continued possession, payment of realty taxes, and her financial distress and alleged weakness of mind at the time of the sale.

ISSUE

The core issue is whether the contract between the parties is an equitable mortgage, or otherwise voidable, and whether the action to annul it had prescribed.

RULING

The Supreme Court denied the petition, affirming the lower courts. The transaction was not an equitable mortgage. None of the circumstances under Article 1602 of the Civil Code were convincingly established. The consideration of P3,000 for a 70-square-meter lot in 1981 was not grossly inadequate, as the market value of her share was approximately P5,640, and the lower price was explainable by her admitted financial distress. The claim of continuous possession and payment of taxes was unsubstantiated; evidence showed it was Angelina who paid the realty taxes, and Adoracion’s possession was merely tolerated due to their familial relationship.
Crucially, even assuming the sale was vitiated by fraud, the action had prescribed. An action for annulment based on fraud prescribes in four years from its discovery. Registration of the deed on July 5, 1988, constituted constructive notice. Thus, the prescriptive period lapsed on July 5, 1992. Adoracion filed her complaint only on November 27, 1992, which was beyond the four-year period. Consequently, the action was time-barred.