G.R. No. 128850 November 20, 1998
ARCHIPELAGO MANAGEMENT AND MARKETING CORPORATION, petitioner, vs. COURT OF APPEALS and the HEIRS OF ROSALINA SANTOS-MORALES, namely, EMETERIO MORALES, LYDIA, TRINIDAD, ROGELIO DE LA PAZ and EMMANUEL S. DE LA PAZ, respondents.

FACTS

The case involves a parcel of land in Quezon City, originally owned and titled in the name of Rosalina Santos-Morales. Rosalina, a widow, married Emeterio Morales, a widower. Emeterio’s son, Narciso Morales, was the president of petitioner Archipelago Management and Marketing Corporation. In 1988, after a fire at the Quezon City Hall destroyed records, Emeterio took the owner’s duplicate certificate of title from Rosalina’s caretaker, allegedly to apply for reconstitution. Rosalina was made to sign several documents, one of which turned out to be a Deed of Absolute Sale dated May 3, 1989, purportedly selling the property to the petitioner corporation for P1,200,000. A new title was issued in the corporation’s name. Rosalina and Emeterio continued to reside on the property, and Rosalina even entered into a lease contract for the buildings on May 19, 1989, and continued paying realty taxes. In 1992, Rosalina’s daughter, Lydia Trinidad, discovered the sale. Rosalina, through Lydia, filed a complaint for annulment of the deed, alleging her signature was obtained by fraud, deceit, and insidious machinations by her husband and stepson, and that she never received the consideration. She also pointed to irregularities: the residence certificate on the deed was expired, and the notary public was not duly commissioned. Rosalina died during the pendency of the case, and her heirs were substituted as plaintiffs. The Regional Trial Court dismissed the complaint. The Court of Appeals initially affirmed but, upon reconsideration, reversed itself and annulled the Deed of Sale.

ISSUE

Whether the Deed of Absolute Sale dated May 3, 1989, is void due to fraud that vitiated the consent of Rosalina Santos-Morales.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Amended Decision of the Court of Appeals. The Court held that fraud attended the execution of the contract, vitiating Rosalina’s consent. The Court found the following circumstances indicative of fraud: (1) Rosalina was tricked into signing the document, believing it was for reconstitution of title, not a deed of sale; (2) there was no economic necessity for her to sell the property; (3) the notary public was not duly commissioned; (4) an expired residence certificate was used; and (5) there was no proof of payment of the purchase price. Furthermore, Rosalina’s subsequent acts—continuing to lease the property, pay taxes, and file an adverse claim upon discovery—were inconsistent with a valid sale. The Court ruled that these circumstances, taken together, clearly established that the contract was tainted with fraud and should be annulled.