G.R. No. L-11765. April 29, 1961. DAMASO DESCUTIDO, ET AL., plaintiffs-appellees, vs. JACINTO BALTAZAR, ET AL., defendants-appellants.
FACTS:

The registered owners of Lot No. 790 were spouses Jose Descutido and Matea Dolduco. A deed of sale (Exhibit B) dated December 10, 1937, purportedly executed by them in favor of Pedro Diamante, led to the cancellation of their title and the issuance of a new one in Diamante’s name. Subsequently, a deed of sale (Exhibit C) executed by Diamante in favor of Bonifacia Descutido (sister of plaintiff Damaso Descutido and wife of appellant Jacinto Baltazar) resulted in the issuance of Transfer Certificate of Title No. 25284 in Bonifacia’s name on May 28, 1941. After Jose Descutido’s death in August 1944, his three children—Damaso, Pedro, and Bonifacia—executed a private deed of partition (Exhibit D) on April 30, 1944, assigning Lot No. 790 to Damaso, who thereafter possessed it continuously.
Damaso Descutido and his wife filed an action to annul Exhibits B and C, alleging they were fraudulent, fictitious, and without consideration. The defendants-appellants, the Baltazars (heirs of Bonifacia), claimed they were purchasers in good faith and asserted affirmative defenses, including prescription and the plaintiffs’ lack of legal capacity to sue. The other defendants, spouses Pedro Diamante and Cristina Doctolero, filed an answer disclaiming any knowledge of the sales, alleging the transactions were fraudulently engineered by Jacinto Baltazar and Notary Public Carlos Divinagracia, and that they never received any consideration.

ISSUE

The primary issues were: (1) whether the action for annulment was barred by prescription; (2) whether the plaintiffs had the legal capacity to sue for annulment of the deeds; and (3) the validity of the appellants’ counterclaim.

RULING

The Supreme Court affirmed the trial court’s decision. On prescription, the Court held the action was timely filed. The lower court found the fraud vitiating the contracts was discovered by the appellees only in 1950 or 1951. The action, instituted on January 3, 1952, was well within the four-year prescriptive period from the discovery of the fraud under the Civil Code.
On legal capacity, the Court ruled that appellee Damaso Descutido had the right to sue. Although not a party to the void deeds, he was a successor-in-interest to the original owners by virtue of the deed of partition (Exhibit D) executed by the heirs, which assigned the lot to him. As such, he could properly institute the action for annulment of the fraudulent instruments that affected his acquired interest.
Regarding the counterclaim for damages and recovery of fruits, the Court found it without merit. The appellants’ own allegations established that the appellees had been in possession of the property since 1941 and had appropriated its products. Consequently, any cause of action for recovery of fruits had long prescribed by the time the answer was filed in 1956. The trial court correctly declared the deeds of sale null and void for being fraudulent and fictitious, ordered the cancellation of the derivative title, and directed the issuance of a new certificate of title in Damaso Descutido’s name.