Portugal v. Intermediate Appellate Court
REITERATIONFacts
The Antecedents: The underlying dispute concerns two parcels of real property owned by spouses Pascual and Cornelia Portugal. In January 1967, their son, Hugo Portugal, borrowed the titles to these properties (a residential lot and an agricultural lot) under the pretense of securing a loan. After Pascual Portugal's death in 1974, the other heirs, the petitioners, sought to collate the estate's properties. Hugo Portugal claimed the titles were lost, but later produced a Transfer Certificate of Title (TCT) No. 23539 in his and his brother Emiliano's names, which had cancelled the original titles. This was based on a deed of sale purportedly from the parents to Hugo and Emiliano. Emiliano denied participation, reconveying his share of one lot, but Hugo refused to return the title to the residential lot, prompting the petitioners to file an action to annul the deed of sale and seek reconveyance of the residential lot. Procedural History: The petitioners, Cornelia Clanor Vda. de Portugal and other heirs, filed an action for annulment of a deed of sale and reconveyance of title against Hugo Portugal in the Court of First Instance of Cavite. The trial court, on June 30, 1980, rendered a decision declaring the deed of sale inoperative and all corresponding subsequent documents, including TCT No. T-23539, void. Hugo Portugal appealed this decision to the Intermediate Appellate Court. The Intermediate Appellate Court reversed the trial court's decision, leading the petitioners to file the present petition for review by certiorari. The Petition: The petitioners seek reversal of the Intermediate Appellate Court's decision dated October 21, 1985, and the reinstatement of the trial court's ruling in their favor. They raise three main issues: (1) whether the action has prescribed, (2) whether the appellate court was justified in disturbing the trial court's findings on witness credibility, and (3) whether the appellate court could entertain the defense of prescription when it was not raised in the answer. The petitioners argue that the deed of sale is void ab initio due to the absence of valid consideration, and therefore, the action for declaration of inexistence of the contract does not prescribe. They also contend that the trial court's findings on credibility should be respected and that the appellate court erred in considering prescription when it was not pleaded.
Issue(s)
Whether or not the present action has prescribed. Whether or not the respondent court was justified in disturbing the trial court's findings on the credibility of the witnesses presented during the trial. Whether or not the appellate court could entertain the defense of prescription which was not raised by the private respondents in their answer to the complaint nor in a motion to dismiss.
Ruling
The petition is GRANTED. The Decision dated October 21, 1985, and the Resolution dated January 24, 1986, of the Intermediate Appellate Court are REVERSED and SET ASIDE. The deed of sale dated January 23, 1967, evidencing the sale of Lot No. 3201 to private respondent Hugo Portugal is declared VOID AB INITIO. The private respondent is ORDERED to reconvey to petitioners the title over Lot No. 3201, which is now under TCT No. T-23539.
Ratio Decidendi
On the issue of prescription: The Supreme Court held that the action was not prescribed. It clarified that the case was not purely an action for reconveyance based on an implied or constructive trust, nor was it merely an action for annulment of a fraudulent contract. Instead, the alleged contract of sale was vitiated by the total absence of a valid cause or consideration, rendering it void ab initio or inexistent. Citing Articles 1350, 1352, and 1409 of the Civil Code, the Court emphasized that a contract without cause or consideration is void. Article 1410 of the Civil Code explicitly states that the action or defense for the declaration of the inexistence of a contract does not prescribe. Therefore, the petitioners' suit, filed on October 26, 1976, was seasonably filed. Even if considered as an action for reconveyance based on a constructive trust, it would still be timely as actions of this nature prescribe in ten years from the date of registration of the deed or issuance of the title, and the deed was registered on January 23, 1967, less than ten years prior to the filing of the suit. On the credibility of witnesses: The Court affirmed that the trial court's findings on the credibility of witnesses deserve full respect and should not be disturbed. The trial judge is in a better position to assess credibility, having personally heard the witnesses and observed their deportment. The exceptions to this rule, such as the trial court overlooking substantial facts or the judge who rendered the decision not being the one who heard the evidence, were not present in this case. Consequently, the appellate court's ruling questioning the credibility of petitioner Cornelia Clanor Vda. de Portugal was reversed. On the appellate court entertaining the defense of prescription: The Court noted that while the defense of prescription was not raised in the answer, it could be passed upon by the court if its presence is plainly apparent on the face of the complaint. However, the Court found this issue to be of no material bearing on the overall outcome due to the earlier finding that the deed of sale was void ab initio. The primary determination that the contract was inexistent meant that the action could not have prescribed, regardless of whether the defense was raised or not.
Main Doctrine
A deed of sale is void ab initio for total absence of valid cause or consideration, and an action for the declaration of its inexistence does not prescribe.