G.R. No. L-37159 November 29, 1977
LUISA RIVERO in substitution of her deceased mother, LUCIA ORIGEN, petitioner, vs. THE HON. COURT OF APPEALS (Special Division of Five Justices) and JAIME RIVERO, respondents.

FACTS

The case originated from an action filed by Lucia Origen and other heirs of the deceased Ana Concepcion against Jaime Rivero. They sought to annul a deed of absolute sale and a corresponding Transfer Certificate of Title covering a 23,245-square-meter parcel of land in Bulacan. The plaintiffs alleged that Ana Concepcion, during her final illness and intending only to mortgage the property for ₱5,000 to settle debts, entrusted her title to Rivero. They claimed Rivero, through fraud, misrepresentation, and undue influence, made the infirm Ana Concepcion sign documents she believed were mortgage papers but were actually a deed of sale and an affidavit of alienation. Rivero registered the property in his name.
The trial court nullified the sale, ordered the cancellation of Rivero’s title, and declared the property part of Ana Concepcion’s estate. The Court of Appeals initially affirmed this decision but, upon Rivero’s motion for reconsideration, reversed itself in an amended decision. The amended decision upheld the deed of sale as valid and declared Rivero the rightful owner, dismissing the complaint. Petitioner Luisa Rivero, substituted for her deceased mother Lucia Origen, appealed this amended decision to the Supreme Court.

ISSUE

The core issue is whether the consent of Ana Concepcion to the deed of absolute sale was vitiated by fraud, specifically through misrepresentation that the instrument she was signing was merely a mortgage contract.

RULING

The Supreme Court reversed the amended decision of the Court of Appeals and reinstated the trial court’s judgment, declaring the deed of sale null and void. The legal logic centered on the presence of fraud under Article 1330 of the Civil Code, which vitiates consent. The Court found that the consent of Ana Concepcion was indeed obtained through fraudulent misrepresentation.
The Court emphasized that in determining vitiated consent, courts must weigh all factual circumstances, including the parties’ relationship, conduct, and the condition of the person giving consent. Critically, the Court found the purchase price of ₱5,000 for over two hectares of land near Manila to be “grossly inadequate” and “shocking to the conscience,” strongly indicating a transaction not entered into freely. This inadequacy of consideration, at less than ₱0.25 per square meter, contrasted sharply with evidence that the property had an option to sell at ₱4.50 per square meter in 1958. Furthermore, the factual backdrop—Ana Concepcion’s illness, her need for a loan to pay a ₱3,000 debt, and her subsequent death without settling that debt—supported the conclusion that her true intent was to mortgage, not to sell, the property. Therefore, Rivero’s act of making her sign a deed of sale under the guise of a mortgage constituted fraud that nullified the contract due to the absence of intelligent and voluntary consent.