G.R. No. L-48430. December 3, 1985.
CONSUELO MACONO CULTURA, JOSE CUBILLAS and PANFILO SALINAS, petitioners, vs. HON. LAURO L. TAPUCAR, BERNARDA E. ANDAYA and ANDAYA REALTY CORPORATION, respondents.

FACTS

Petitioners, heirs of Juana Macono, filed a complaint on May 31, 1977, seeking to annul a deed of sale dated November 26, 1934, wherein Juana Macono purportedly sold a 3.0974-hectare land, originally acquired by free patent, to respondent Bernarda E. Andaya for P110.00. The complaint alleged the sale was procured through fraud, that petitioners (except one) were minors who did not sign the deed, and that Andaya subsequently obtained a new certificate of title and sold the property. Petitioners prayed for restoration of possession and damages.
Private respondents moved to dismiss the complaint on grounds of prescription, asserting that their open, continuous possession in the concept of an owner since 1934 had vested ownership by acquisitive prescription. The trial court granted the motion, ruling the action had prescribed under the Code of Civil Procedure ( Act No. 190 ), as the prescriptive period commenced before the effectivity of the New Civil Code.

ISSUE

Whether the trial court correctly dismissed the complaint on the ground that the action to annul the 1934 deed of sale had prescribed.

RULING

Yes, the trial court correctly dismissed the complaint. The Supreme Court held that the nature of an action and the applicable prescriptive period are determined by the allegations in the complaint itself, not by a party’s subsequent arguments. Examining the complaint, the Court found it was fundamentally an action for annulment of a contract based on fraud, as it explicitly alleged the sale was executed “by means of fraud” and sought relief on that basis. There was no allegation that the deed was void ab initio for being executed within the five-year prohibition period under the Public Land Act ( Commonwealth Act No. 141 , Section 118).
Consequently, the applicable law was the Code of Civil Procedure. An action based on fraud prescribes in four years from its discovery. The fraud was deemed discovered, at the latest, on December 12, 1934, when the deed was registered with the Register of Deeds, constituting constructive notice to all. The complaint filed in 1977 was filed decades beyond the four-year prescriptive period. The Court also noted parenthetically that the petitioners’ new theory—that the deed was void for violating the five-year prohibition—was factually baseless, as the free patent was granted on November 25, 1929, and the sale was executed on November 26, 1934, which was after the five-year period had lapsed. Therefore, the action was correctly dismissed for having prescribed.