Garanciang v. Garanciang
REITERATIONFacts
The Antecedents: Plaintiffs-appellants alleged that they were the owners of several parcels of land. They claimed that on three occasions, they were induced by misrepresentation, fraud, and deceit to sign documents purportedly for a pension and passport application for their grandson, which turned out to be deeds of sale for their lands. These sales were allegedly executed without any consideration. Possession of the properties was transferred to the defendants, who are the son and daughter-in-law of the plaintiffs, as a gesture of kindness. The defendants succeeded in registering the documents and obtaining transfer certificates of title. Procedural History: The plaintiffs discovered the alleged anomalous execution of the deeds of sale on or about September 10, 1958, and filed an adverse claim. Despite demands, the defendants refused to return possession of the lands. The plaintiffs filed a complaint for recovery of possession, declaration of nullity of the deeds of sale and transfer certificates of title, and damages. The defendants moved to dismiss the complaint on the grounds of prescription and lack of cause of action. The trial court granted the motion, dismissing the complaint based on prescription under Article 1391 of the Civil Code, as the action was filed more than four years after the discovery of the alleged fraud. The Petition: The plaintiffs appealed the dismissal of their complaint, arguing that the trial court erred in dismissing the case on the ground of prescription.
Issue(s)
Whether the trial court erred in dismissing the complaint on the ground of prescription. Whether the alleged total absence of consideration renders the contract absolutely void and inexistent, thus making the action to set it aside imprescriptible.
Ruling
The order appealed from is set aside and the case is remanded to the court of origin for further proceedings.
Ratio Decidendi
On the issue of prescription: The trial court erred in dismissing the complaint solely on the ground of prescription. While Article 1391 of the Civil Code provides that an action for annulment on the ground of fraud prescribes in four years from the discovery of the fraud, the complaint also alleged a total absence of cause or consideration for the deeds of sale. This allegation, if true, would render the contracts not merely voidable but absolutely void and inexistent. The Supreme Court has consistently held that an action to set aside a contract that is fictitious, or absolutely void or inexistent, does not prescribe, pursuant to Article 1410 of the Civil Code. The hypothetical admission of the facts in the complaint for the purpose of the motion to dismiss means that the allegation of total absence of consideration must be considered true at this stage of the proceedings. Therefore, the dismissal based on prescription was premature. On the nature of the contract: The complaint averred not only fraud in the execution of the deeds of sale but also a total absence of cause or consideration. Such a situation, if proven, would classify the contracts as absolutely void and inexistent from the beginning, rather than merely voidable. A void contract produces no legal effect whatsoever, and an action to declare its nullity does not prescribe. This is distinct from a voidable contract, which is valid until annulled and is subject to prescription periods for actions seeking annulment. The distinction is crucial because it determines whether the action is barred by the lapse of time. The Court emphasized that the alleged lack of consideration goes to the very essence of the contract, rendering it void ab initio.
Main Doctrine
An action to set aside a contract that is fictitious, or absolutely void or inexistent, does not prescribe, as distinguished from an action for annulment on the ground of fraud, which prescribes in four years from the discovery of the fraud.