GR L 73564; (March, 1988) (Digest)
G.R. No. L-73564 March 25, 1988
CORNELIA CLANOR VDA. DE PORTUGAL, et al., petitioners, vs. INTERMEDIATE APPELLATE COURT and HUGO C. PORTUGAL, respondents.
FACTS
Petitioners, the widow and children of the late Pascual Portugal, sought the annulment of a deed of sale and reconveyance of a residential lot. The properties, originally registered in the names of spouses Pascual and Cornelia, were allegedly sold to their sons, Hugo and Emiliano, via a 1967 deed. Cornelia claimed she merely lent the titles to Hugo in 1967 for a loan negotiation. The purported sale was discovered only after Pascual’s death in 1974 when Hugo could not return the titles, presenting instead a new TCT in his and Emiliano’s names. Emiliano denied participation and reconveyed his share. Hugo refused, leading to the suit.
The trial court declared the deed inoperative. The Intermediate Appellate Court reversed, holding the action had prescribed, being based on fraud which prescribes in four years from the deed’s registration in 1967. The petitioners contended the action was for reconveyance based on an implied trust, which prescribes in ten years, and that the defense of prescription was not raised in the answer.
ISSUE
The primary issue is whether the action for annulment and reconveyance had prescribed.
RULING
The Supreme Court granted the petition, reversing the appellate court. The legal logic centers on the nature of the void contract. The Court held the action had not prescribed because the deed of sale was void ab initio for total absence of consideration or cause, not merely voidable due to fraud. A void contract produces no legal effect and cannot be ratified; the right to seek its declaration of nullity does not prescribe. The petitioners’ consistent claim was that Cornelia never knew of the deed and never received any payment, which the trial court found credible. Since the contract was void, the defense of prescription based on a four-year period for annulment due to fraud was inapplicable.
The Court also addressed the appellate court’s disturbance of the trial court’s factual findings, reiterating the doctrine that the trial court’s assessment of witness credibility is binding unless exceptions exist, none of which were present. On the third issue, while prescription can be considered motu proprio if apparent from the complaint, it was immaterial here given the void nature of the contract. Consequently, the deed was declared void, and Hugo was ordered to reconvey the title to the petitioners.