Dingal v. Intermediate Appellate Court
REITERATIONFacts
The Antecedents: Tomas Dingal applied with NAFCO for the purchase of two parcels of land. Due to financial need, Dingal and his wife Marcelina Loay borrowed P1,200.00 from Simeona P. de Donayre, offering the lots as collateral. Instead of a mortgage, Dingal executed a special power of attorney for Simeona to administer the lots and a deed of sale of his rights, interests, and titles over the lots to Simeona for P1,200.00. Simeona gave only a portion of the loan. Later, Simeona invited the Dingal spouses to sign a document which turned out to be a deed of sale of the lots in favor of Engr. Iluminado Quinto. The Dingal spouses discovered Quinto was in possession of the lots a year later. Procedural History: On August 8, 1974, the Dingal spouses filed a complaint for nullity of deeds, reconveyance, damages, and injunction against Simeona and Quinto. Quinto alleged abandonment, valid sale, and prescription. The lower court dismissed the case, ruling that the action prescribed under Articles 1380(2) and 1391 of the Civil Code, as the deeds were annullable due to fraud discovered in 1961, and the action should have been filed within four years. The Court of Appeals affirmed the dismissal, holding the action prescribed and that the plaintiffs lacked personality to annul the contracts as the government was the proper party for reversion. The Petition: Petitioners seek review of the Court of Appeals' decision affirming the dismissal of their case on the ground of prescription.
Issue(s)
Whether the action to annul the deeds of sale has prescribed. Whether the petitioners have the personality to file an action to annul the deeds of sale. Whether Presidential Decree No. 1304 rendered the issue of legality moot and academic.
Ruling
The decision of the Court of Appeals is reversed and set aside. The lower court is directed to consolidate Civil Case No. 8451 with Civil Case No. 14988 and proceed with the disposition of said cases. The Solicitor General is furnished a copy for appropriate action.
Ratio Decidendi
On the issue of prescription: The Court held that the action filed was for the declaration of nullity of the deeds of sale for being in violation of law, specifically Section 8 of Republic Act No. 477, which rendered the contracts void ab initio. Such an action for the declaration of the inexistence of contracts is imprescriptible under Article 1410 of the Civil Code. Therefore, the four-year prescriptive period for annulment of voidable contracts under Article 1391 of the Civil Code, which applies to fraud, does not govern this case. The transfer of rights by Dingal to Simeona occurred before the award or signing of the contract of sale, making it null and void under the original provisions of R.A. 477. Consequently, the action to declare these void deeds as non-existent has not prescribed. On the issue of personality to file the action: The Court found that the petitioners are the proper parties in interest. The action was for the declaration of nullity of the deeds and for reconveyance, obviously to protect whatever interest they may have under Act 477. The Court clarified that it was not an action for reversion to the State, but for the declaration of nullity of deeds that were void ab initio under the law. The issuance of Transfer Certificates of Title in the name of Tomas Dingal further strengthens their claim to the properties, although this does not preclude the Solicitor General from initiating an action for cancellation and reversion if warranted. On the issue of Presidential Decree No. 1304: The Court ruled that Presidential Decree No. 1304, which amended Section 8 of Republic Act No. 477, cannot be applied in favor of Quinto. The decree confirms and ratifies conveyances made after the issuance of a certificate of title, and prior to July 24, 1976. However, the transactions in the case at bar occurred before the issuance of the award and the execution of the contract of sale. The sale to Simeona was void ab initio, and Quinto, deriving his rights from Simeona, cannot seek validation from a transaction that was fundamentally null and void from its inception.
Main Doctrine
An action for the declaration of the inexistence of a contract, which is void ab initio for being in violation of law, is imprescriptible. The four-year prescriptive period for annulment of voidable contracts does not apply.