SPOUSES RICARDO PASCUAL vs. COURT OF APPEALS

FACTS:

 Petitioner Consolacion and respondent Remedios are the niece and granddaughter, respectively, of the late Canuto. Canuto and 11 other individuals, including his sister Catalina and his brother Victoriano, were co-owners of a parcel of land in Tanza, Navotas, Metro Manila. The property, known as Lot 2 of Plan Psu 13245, had an area of 9,347 square meters and was covered by Original Certificate of Title No. 4207 issued by the Register of Deeds of Rizal. CATALINA, CANUTO, and VICTORIANO each owned an aliquot 10/70 share or 1,335 square meters of Lot 2. On 26 September 1956, CANUTO and CONSOLACION executed a Kasulatan ng Bilihang Tuluyan[4] (“KASULATAN”). Under the KASULATAN, CANUTO sold his 10/70 share in Lot 2 in favor of CONSOLACION for P2,250.00. The KASULATAN, notarized by Notary Public. CONSOLACION immediately took possession of Lot Nos. 2-A and 2-E. She later declared the land for taxation purposes and paid the corresponding real estate taxes On 4 February 1988, REMEDIOS filed a complaint against CONSOLACION and her spouse Ricardo Pascual in the Regional Trial Court of Malabon, Branch 165, for “Annulment or Cancellation of Transfer Certificate [of Title] and Damages.” REMEDIOS claimed that she is the owner of Lot Nos. 2-A and 2-E because CATALINA devised these lots to her in CATALINA’s last will and testament. Petitioners sought to dismiss the complaint on the ground of prescription. Petitioners claimed that the basis of the action is fraud, and REMEDIOS should have filed the action within four years from the registration of CONSOLACION’s title on 28 October 1968 and not some 19 years later on 4 February 1988.

ISSUE:

Whether or not the action is barred by prescription..

RULING:

 Yes. The action is already barred by prescription. The four-year prescriptive period relied upon by the trial court applies only if the fraud does not give rise to an implied trust, and the action is to annul a voidable contract under Article 1391 of the Civil Code. In such a case, the four-year prescriptive period under Article 1391 begins to run from the time of discovery of the mistake, violence, intimidation, undue influence or fraud. In the present case, REMEDIOS does not seek to annul the KASULATAN. REMEDIOS does not assail the KASULATAN as a voidable contract. In fact, REMEDIOS admits the validity of the sale of 1,335 square meters of land under the KASULATAN. However, REMEDIOS alleges that the excess area of 1,335 meters is not part of the sale under the KASULATAN. REMEDIOS seeks the removal of this excess area from TCT No. (232252) 1321 that was issued to CONSOLACION. Consequently, REMEDIOS’ action is for “Annulment or Cancellation of Transfer Certificate [of Title] and Damages.”[14] REMEDIOS’ action is based on an implied trust under Article 1456 since she claims that the inclusion of the additional 1,335 square meters in TCT No. (232252) 1321 was without basis. In effect, REMEDIOS asserts that CONSOLACION acquired the additional 1,335 square meters through mistake or fraud and thus CONSOLACION should be considered a trustee of an implied trust for the benefit of the rightful owner of the property. Clearly, the applicable prescriptive period is ten years under Article 1144 and not four years under Articles 1389 and 1391. It is now well-settled that the prescriptive period to recover property obtained by fraud or mistake, giving rise to an implied trust under Article 1456 of the Civil Code, is ten years pursuant to Article 1144.[16] This ten-year prescriptive period begins to run from the date the adverse party repudiates the implied trust, which repudiation takes place when the adverse party registers the land. REMEDIOS filed her complaint on 4 February 1988 or more than 19 years after CONSOLACION registered her title over Lot Nos. 2-A and 2-E on 28 October 1968. Unquestionably, REMEDIOS filed the complaint late thus warranting its dismissal. As the Court recently declared in Spouses Alfredo v. Spouses Borras, [18] — Following Caro, [19] we have consistently held that an action for reconveyance based on an implied trust prescribes in ten years. We went further by specifying the reference point of the ten-year prescriptive period as the date of the registration of the deed or the issuance of the title.