Prescription (1990)

In 1960, an unregistered parcel of land was mortgaged by owner O to M, a family friend,

as collateral for a loan. O acted through his attorney-in-fact, son S, who was duly
authorized by way of a special power of attorney, wherein O declared that he was the
absolute owner of the land, that the tax declarations/receipts were all issued in his
name, and that   he   has   been   in   open,   continuous   and   adverse possession in the
concept of owner.

As O was unable to pay back the loan plus interest for the past five [5) years, M had to
foreclose the mortgage. At the foreclosure sale, M was the highest bidder. Upon issuance
of the sheriff’s final deed of sale and registration in January, 1966, the mortgage
property was turned over to M’s possession and control M has since then developed the
said property. In 1967, O died, survived by sons S and P.

In  1977,  after  the  tenth  (10th)  death  anniversary  of  his father O. son P filed a suit to
annul the mortgage deed and subsequent  sale  of  the  property,  etc.,  on  the  ground  of
fraud.  He  asserted  that  the  property  in  question  was conjugal in nature actually
belonging, at the time of the mortgage, to O and his wife, W, whose conjugal share went
to their sons (S and P) and to O.

(a) Is the suit filed by P barred by prescription? Explain your answer.

Yes, the suit filed by P is barred by prescription.

Article 173 of the Civil Code provides that, “The wife may, during the marriage, and
within ten years from the transaction questioned, ask the courts for the annulment of
any contract of the husband entered into without her consent, when such consent is
required, or any act or contract of the husband which tends to defraud her or impair her
interest in the conjugal partnership property. Should the wife fail to exercise this right,
she or her heirs, after the dissolution of the marriage, may demand the value of property
fraudulently alienated by the husband.”

Thus, even if the mortgage contract conveying conjugal properties entered into by the
husband without the wife's consent may be annulled entirely, it was way past the 10-
year period required by law.

(b) After the issuance of the sheriff’s final deed of sale in 1966 in this case, assuming that

M applied for registration under the Torrens System and was issued a Torrens Title to
the said property in question, would that added fact have any significant effect on your
conclusion? State your reason.

No, because a Torrens title can be attacked only for fraud within one year after the date
of the issuance of the decree of registration. Such attack must be direct and not by
collateral proceeding. The title represented by the certificate cannot be changed, altered,
modified, enlarged or diminished in a collateral proceeding. After one year from the
date of the decree, the sole remedy of the landowner whose property has been
wrongfully or erroneously registered in another’s name is not to set aside the decree but,
respecting the decree as incontrovertible and no longer open to review, to bring an
ordinary action in the ordinary court of justice for reconveyance. However, an action in
personam against M for the reconveyance of the title in their favor is available within
four years from the date of the discovery of the fraud but not later than ten (10) years
from the date of registration of the title in the name of M. Thus, the suit filed is also
barred by prescription.

SUGGESTED ANSWER:

(a) Under Art. 173 of the Civil Code, the action is barred by prescription because the wife
had only ten (10) years from the transaction and during the marriage to file a suit for the
annulment of the mortgage deed.

Alternative Answers to (a) first Alternative Answer:

(a) The mortgage contract executed by O, if at all, is only a voidable contract since it
involves a conjugal partnership property. The action to annul the same instituted in
1977, or eleven years after the execution of the sheriff’s final sale, has obviously
prescribed because:

1)    An action to annul a contract on the ground of fraud must be brought within four (4)
years from the date of discovery of the fraud. Since this is in essence an action to recover
ownership,    it must be reckoned from the date   of   execution   of   the   contract   or   
from   the registration of the alleged fraudulent document with the assessor’s office for
the purpose of transferring the tax declaration, this being unregistered land, (Baelu
v. Intermediate Appellate Court G.R. L-74423, Jan. 30, 1989, 169 SCRA 617).

2)     If the action is to be treated as an action to recover ownership of land, it would have

prescribed just the same because more than 10 years have already elapsed since the date
of the execution of the sale.

SECOND ALTERNATIVE ANSWER:

(a)  The action to recover has been barred by acquisitive prescription in favor of M
considering that M has possessed the land under a claim of ownership for ten (10) years
with a just title.

(b)   If M had secured a Torrens Title to the land, all the more S and P could not recover
because if at all their remedies would be:

1.   A Petition to Review the Decree of Registration. This can be availed of within one (1)
year from-the entry thereof, but only upon the basis of “actual fraud.” There is no
showing that M committed actual fraud in securing his title to the land; or
2. An action in personam against M for the reconveyance of the title in their favor.
Again, this remedy is available within four years from the date of the discovery of the
fraud but not later than ten (10) years from the date of registration of the title in the
name of M.