G.R. No. 125715 December 29, 1998
RICARDO F. MARQUEZ, et al., petitioners, vs. COURT OF APPEALS, ALFREDO F. MARQUEZ and BELEN F. MARQUEZ, respondents.

FACTS

The case involves a family dispute over a 161-square meter conjugal property in San Juan Del Monte, Rizal, originally owned by spouses Rafael Marquez, Sr. and Felicidad Marquez, who had twelve children. Felicidad died intestate in 1952. In 1982, Rafael Sr. executed an Affidavit of Adjudication, falsely representing himself as the sole heir, and secured TCT No. 33350 in his name alone. Subsequently, in 1983, he donated the entire property via a Deed of Donation Inter Vivos to three of his children: respondents Alfredo and Belen, and petitioner Rafael Jr. The other children (petitioners) discovered the new title and demanded shares, but respondents ignored them.
In 1991, petitioners, including Rafael Jr., filed a complaint for Reconveyance and Partition with Damages before the trial court. They alleged fraud, claiming respondents took advantage of their father’s advanced age. The trial court ruled in favor of petitioners, declaring the Affidavit and Donation void ab initio and stating that an action to set aside a void document does not prescribe. The Court of Appeals reversed, applying the four-year prescriptive period for actions based on fraud from the date of discovery (deemed to be June 16, 1982, when TCT No. 33350 was issued), and thus held the 1991 action barred.

ISSUE

Whether the action for reconveyance filed by the petitioners had prescribed.

RULING

The Supreme Court reversed the Court of Appeals and reinstated the trial court’s decision. The legal logic is anchored on the nature of the trust created and the applicable prescriptive period. Upon Felicidad’s death in 1952, her one-half conjugal share passed to her compulsory heirs: her spouse and all twelve children. Rafael Sr.’s 1982 Affidavit of Adjudication, which fraudulently excluded the other heirs, constituted an implied or constructive trust under Article 1456 of the Civil Code. A constructive trust is created by law to prevent unjust enrichment when property is obtained through fraud.
An action for reconveyance based on such an implied or constructive trust prescribes in ten (10) years from the issuance of the title under the constructive trust, pursuant to Article 1144 of the Civil Code. The Court of Appeals erroneously applied the four-year period from the old Code of Civil Procedure, as cited in Gerona v. De Guzman. The correct rule, established under the present Civil Code, is the ten-year period. The ten-year period commenced from the date of the registration of the deed of donation and the issuance of the new title in the donees’ names in 1983. The complaint filed in 1991 was well within this ten-year prescriptive period. Therefore, the action had not prescribed. The Court also noted that Rafael Sr. could not donate the share belonging to his wife’s estate, as a trustee cannot donate entrusted property.