Dumanon v. Butuan City Rural Bank
REITERATIONFacts
The Antecedents: Plaintiffs-appellants filed a complaint seeking to be declared absolute owners of a property, to have a deed of donation executed in 1933 declared void and inexistent, to cancel Transfer Certificate of Title (TCT) No. RT 82 and RT 479, and to declare void a mortgage and an annotation on TCT RO 82. They alleged that the deed of donation was fraudulently executed, as the supposed donors were illiterate and could not have signed the document, and that they continued to claim the land as their own, obtaining Original Certificate of Title (OCT) No. RO-23 (1242) in their names. The registration of the deed of donation on November 16, 1951, was also alleged to be in bad faith and unauthorized. Subsequently, the property was sold to defendants Carlos Curilan and Rufina Naranjo, who obtained TCT No. 479. Procedural History: Defendants Carlos Curilan and Rufina Naranjo filed a motion to dismiss the complaint on the grounds of prescription, lack of cause of action, and failure to exert earnest efforts towards compromise. The Court of First Instance of Agusan granted the motion, dismissing the case based on prescription and laches. A motion for reconsideration was denied. The Petition: Plaintiffs-appellants appealed the dismissal order, contending that the lower court erred in dismissing their complaint.
Issue(s)
Whether the action to annul the deed of donation is barred by prescription and laches. Whether the action to annul the registration of the deed of donation is barred by prescription. Whether the action to enforce an implied trust is barred by prescription. Whether the motion to dismiss was filed seasonably.
Ruling
The Supreme Court affirmed the order of dismissal. The Court held that the action to annul the deed of donation, as well as the action to annul its registration and to enforce an implied trust, were all barred by prescription and laches. The motion to dismiss was also found to have been filed within the reglementary period.
Ratio Decidendi
On the issue of prescription and laches barring the action to annul the deed of donation: The Court held that the deed of donation was executed in 1933, and the action to annul it on the ground of fraud was filed on January 26, 1965. This lapse of 32 years clearly exceeded the prescriptive period for actions based on fraud, which is four years from discovery. The Court reasoned that the alleged fraud was discovered at the latest upon registration of the deed, as registration serves as notice to the world. Furthermore, even if the ground were lack of consideration, the prescriptive period would be ten years. Thus, the action to annul the donation was barred by prescription and laches. On the overall prescription of the action: The Court concluded that regardless of whether the action was to annul the deed of donation, annul its registration, or seek reconveyance based on an implied trust, it was barred by the lapse of ten years from the time the cause of action accrued. The Court cited jurisprudence holding that such actions, even for reconveyance, are subject to prescription. The prescription also applied to the vendees, Carlos Curilan and Rufina Naranjo, as their rights derived from their vendors. On the issue of prescription barring the action to annul the registration of the deed of donation: The plaintiffs-appellants contended that their principal action was the annulment of the registration of the deed of donation on November 21, 1951. However, the complaint itself alleged that the registration took place on November 16, 1951. From this date until the filing of the action on January 26, 1965, 14 years had elapsed. The Court reiterated that an action to annul a registration based on fraud must be filed within four years from discovery, and registration itself constitutes notice. Therefore, this action was also barred by prescription. On the issue of prescription barring the action to enforce an implied trust: The Court considered the theory that the unlawful registration created an implied trust. However, even in such cases, an action to enforce the trust prescribes in ten years, or four years if fraud is involved. The Court found that the act of registration by the defendants, obtaining title in their names, and subsequently selling the property, constituted an unequivocal act of repudiation of any trust. This repudiation, coupled with the alleged fraudulent conspiracy in the sale, meant that the prescriptive period of four years from the discovery of the fraud (which would be when the sale was registered in 1957) had also lapsed. Therefore, the action to enforce the trust was prescribed. On the issue of whether the motion to dismiss was filed seasonably: The Court clarified that the time to file a motion to dismiss is coterminous with the period to answer. The defendants had filed a motion for a bill of particulars, which suspended the running of the period to answer. The period resumed upon the filing of the amended complaint. As the time to answer the amended complaint had not yet lapsed when the motion to dismiss was filed, it was considered timely. The Court stated that the ground for dismissal was being invoked in the first and only motion to dismiss filed, and thus, it was not barred for failure to invoke it earlier.
Main Doctrine
An action to annul a deed of donation on the ground of fraud or lack of consideration, executed in 1933, is barred by prescription and laches when filed on January 26, 1965, after the lapse of 32 years. Similarly, an action to annul the registration of such deed, which occurred on November 16, 1951, is also barred by prescription, as 14 years elapsed before the filing of the complaint on January 26, 1965. Even if an implied trust is created by the unlawful registration, an action to enforce it prescribes within 10 years, or 4 years if fraud is involved, especially when the registration and subsequent sale of the property constitute an unequivocal act of repudiation of any trust.