Bilad v. Carantes
REITERATIONFacts
1. The Antecedents: The underlying dispute concerns the ownership of Lots Nos. 44-D and 44-E, originally part of Lot No. 44 registered under T.C.T. No. 2540 in the name of Maximino Carantes, following a deed of sale executed in 1940 by Maximino Carantes in favor of the Government. The plaintiffs, heirs of Mateo Carantes, allege that they executed a deed of "Assignment of Right to Inheritance" on October 23, 1939, based on Maximino Carantes' representation that it was merely to facilitate the conveyance of portions of Lot No. 44 to the Government to minimize expenses. They claim they only discovered the true nature of the deed, which purported to assign their inheritance rights to Maximino Carantes, on February 18, 1958. They seek to have the assignment declared void, the lots partitioned, and Maximino Carantes ordered to convey their shares. 2. Procedural History: The complaint was filed on September 4, 1958. The defendants moved to dismiss, arguing the action was barred by the statute of limitations and stated no cause of action due to acquisitive prescription. The trial court denied this motion, finding allegations of co-ownership and trust. After trial, the court dismissed the complaint on January 28, 1965, ruling that the action was prescribed as of March 16, 1940, the date of registration of the deed, and that Maximino Carantes had acquired ownership through acquisitive prescription. The plaintiffs appealed to the Court of Appeals, which reversed the trial court's decision. 3. The Petition: The petitioner seeks review of the Court of Appeals' decision, arguing that the respondents' action, characterized by the petitioner as one for reformation of an instrument, is time-barred. The Supreme Court, however, disregards this new theory, as it was not raised in the lower courts. The Court addresses the respondents' claim that the deed of assignment is void ab initio due to lack of consent and inadequate consideration, finding that the P1.00 consideration and the recital of Mateo Carantes' prior declaration constitute valid consideration. The Court then analyzes the action as one to annul the contract due to fraud, noting the four-year prescriptive period from discovery. It holds that registration on March 16, 1940, constitutes constructive notice, making the action filed in 1958 prescribed. The Court further clarifies that even if a constructive trust existed, an action for reconveyance based on it is prescriptible within ten years, which also expired. Finally, the Court finds no continuing and subsisting trust, as Maximino Carantes' acts of dominion, including registration of the deed and mortgaging the property, constituted a clear repudiation of any trust.
Issue(s)
Whether the action for annulment of the deed of "Assignment of Right to Inheritance" on the ground of fraud is barred by the statute of limitations. Whether the registration of the deed of assignment constitutes constructive notice to the private respondents, thereby commencing the prescriptive period. Whether a constructive trust was created and if an action for reconveyance based on such trust is imprescriptible. Whether Maximino Carantes' acts constituted an open repudiation of any trust, leading to acquisitive prescription.
Ruling
The Supreme Court set aside the judgment of the Court of Appeals and entered another dismissing the complaint. The Court ruled that the action was barred by the statute of limitations.
Ratio Decidendi
On Issue 1: The Supreme Court held that the action to annul the deed of "Assignment of Right to Inheritance" on the ground of fraud is governed by Article 1391 of the Civil Code, which prescribes a period of four years from the discovery of the fraud. The Court emphasized that registration of an instrument in the Registry of Deeds constitutes constructive notice to the whole world. Therefore, the discovery of the alleged fraud is deemed to have occurred on March 16, 1940, the date of registration of the deed and the issuance of the new Transfer Certificate of Title in Maximino Carantes' name. Since the complaint was filed on September 4, 1958, the action was filed beyond the four-year prescriptive period and was consequently barred by the statute of limitations. On Issue 2: The Court affirmed the principle that registration of an instrument serves as constructive notice. Citing established jurisprudence, the Court stated that knowledge of what might have been revealed by proper inquiry is imputable to the inquirer. In this case, the registration of the deed of assignment on March 16, 1940, meant that the private respondents were deemed to have discovered the alleged fraud on that date, regardless of whether they had actual knowledge. This constructive notice commenced the running of the four-year prescriptive period for filing an action for annulment based on fraud. On Issue 3: The Supreme Court disagreed with the Court of Appeals' conclusion that an action for reconveyance based on a constructive trust is imprescriptible. The Court clarified that it is now settled jurisprudence that an action for reconveyance based on an implied or constructive trust is prescriptible and prescribes in ten years. The ten-year prescriptive period in this case began on March 16, 1940, when Maximino Carantes registered the deed of assignment and obtained a new title exclusively in his name. As the action was filed on September 4, 1958, it was clearly barred by the ten-year extinctive prescription period. On Issue 4: The Court found that there was no continuing and subsisting trust. From March 16, 1940, when Maximino Carantes registered the deed and obtained a new title in his name, he began to hold the property in open and clear repudiation of any trust. His subsequent acts, such as executing a deed of sale to the Government on the same date and mortgaging Lot No. 44-D with the Philippine National Bank in 1948 as his exclusive property, constituted acts of dominion that were anathema to the concept of a continuing trust. These acts demonstrated a clear repudiation of any alleged trust relationship, further supporting the claim of acquisitive prescription and the running of the prescriptive periods.
Main Doctrine
The Supreme Court reiterated that the registration of an instrument, such as a deed of assignment, in the Registry of Deeds serves as constructive notice to the entire world. Consequently, the prescriptive period for an action based on fraud or to annul a contract, which is four years, commences from the date of such registration. Furthermore, the Court clarified that an action for reconveyance based on an implied or constructive trust is prescriptible, with a general prescriptive period of ten years, commencing from the time of registration or the repudiation of the trust. This ruling emphasizes the importance of vigilance and timely legal action by parties who believe their rights have been prejudiced by registered instruments.