G.R. No. L-11765 - Descutido vs. Baltazar

Case Summary (G.R. No. L-11765)

Factual Background

Spouses Jose Descutido and Matea Dolduco were the registered owners of Lot No. 790, with Original Certificate of Title No. 31060 issued in their names. Their title was cancelled after the registration of Exhibit B, a deed of sale dated December 10, 1937, allegedly executed by Jose and Matea in favor of Pedro Diamante, which resulted in the issuance of Transfer Certificate of Title No. 20491 in Diamante’s name.

Thereafter, that transfer title was cancelled upon the registration of Exhibit C, another deed of sale executed by Diamante in favor of Bonifacia Descutido on June 1, 1940, leading to the issuance of Transfer Certificate of Title No. 25284 in Bonifacia’s name on May 28, 1941.

The lower court found that Jose Descutido died in August 1944, leaving three children: Damaso (the appellee), Pedro, and Bonifacia. Bonifacia was married to appellant Jacinto Baltazar. The other Baltazar-appellants were Bonifacia’s children and were impleaded as surviving heirs. The other defendants were Pedro Diamante and Cristina Doctolero, the spouses Diamante’s side of the controversy.

Commencement of the Action and Pleadings

Damaso Descutido and his wife Regina Decierdo commenced the action to annul the deeds of sale (Exhibits B and C) on the ground that they were fraudulent, fictitious, and unsupported by any valid and sufficient consideration.

The Baltazar appellants denied material averments, while asserting affirmative defenses that (a) the action was barred, (b) plaintiffs lacked legal capacity to sue, and (c) appellants were purchasers in good faith for valuable consideration. They also included a counterclaim (erroneously designated as a cross-complaint) alleging that appellants bought Lot 790 from Diamante; that by reason of the deeds and their registration, Diamante’s title was cancelled and Transfer Certificate of Title No. 25284 was issued in their names; that they took possession after purchase; and that in 1941 plaintiffs, by force and intimidation, took possession and remained in possession until the filing of the answer on April 21, 1956. The counterclaim sought recovery of alleged value of products of the land from 1941 to December 31, 1950 and delivery of future harvests.

Diamante and his wife filed an answer admitting some allegations and denying others. They asserted, in substance, that they were not aware of any purchase or possession by them; that they never sold the property to Bonifacia; and that the alleged sale was fraudulently engineered by Jacinto Baltazar with the cooperation of Notary Public Carlos Divinagracia, allegedly related to the defendants. They prayed for absolution and reconveyance of Lot 790 to plaintiffs.

Findings of Fact by the Court of First Instance

After trial, the lower court made several factual determinations. It found that in 1937, Pedro Diamante had sold a fishpond to Pedro Descutido for P3,000.00, with P500.00 paid on the date of contract and P2,500.00 to be paid later, the unpaid balance to be secured by a mortgage allegedly to be executed by Jose Descutido—but, instead, Jose was made to sign Exhibit B. The court further found that in 1940, upon Pedro’s inability to pay the unpaid balance, Pedro agreed to return the fishpond to Diamante, with the earlier P500.00 to be treated as payment of rentals. Diamante was then made to sign a document he believed canceled the mortgage that Jose was supposed to have executed, but it turned out to be Exhibit C, a deed of sale to Bonifacia.

The lower court also found that Diamante had not paid any portion of the P3,360.00 stated as consideration in Exhibit B, nor had he received P200.00 stated as consideration for Exhibit C. It further found that Diamante had never been in possession of the property described in the deeds. It also found that Diamante learned that the document he had been made to sign as “mortgage cancellation” was, in fact, a deed of sale in favor of Bonifacia only in 1950, when a dispute over possession arose between Damaso Descutido and Jacinto Baltazar and an investigation by the Chief of Police of Dumangas ensued.

Critically, the lower court found that Damaso became aware of the deeds (Exhibits B and C) and of the transfer certificate in Bonifacia’s name only in 1951, when Jacinto Baltazar attempted to take away possession.

Dispositive Ruling of the Court of First Instance

In light of these factual findings, the lower court declared Exhibits B and C fraudulent, fictitious, and void and non-existent, and it ordered the cancellation of Transfer Certificate of Title No. 25284 in Bonifacia’s name. It then directed issuance of a new title in the name of Damaso Descutido married to Regina Decierdo.

The court grounded Damaso’s entitlement to ownership on a deed of partition (Exhibit D) executed on April 30, 1944 by the spouses Jose Descutido and Matea Dolduco and their three children. It ruled that by virtue of that partition, Damaso was the owner of Lot No. 790 and ordered the Register of Deeds to implement the cancellation and issuance.

Appellate Posture and Waiver of Questions of Fact

On appeal to the Supreme Court, the Baltazar appellants raised several assignments of error. The Supreme Court noted that, although the appellants initially indicated in their notice of appeal that they intended to appeal to the Court of Appeals, they later filed a petition on October 10, 1956 asking for leave to change the forum designation to the Supreme Court, asserting that the issues were “practically questions of law.” The Court held that they thereby waived their right to raise questions of fact and were bound by the lower court’s findings.

Appellants’ Assignments of Error and the Supreme Court’s Treatment

The appellants’ first assignment of error argued that the action was barred because it was commenced on January 3, 1952. The Supreme Court rejected this contention. It held that, as the lower court found, the fraud vitiating the contracts was discovered only in 1950 or 1951, and therefore the action was instituted within the four-year period counted from discovery.

The second assignment of error asserted that appellees had no right to sue for annulment because they were not parties to the deeds of sale. The Supreme Court answered that although appellees did not personally execute the deeds, the lower court had found that Exhibit D, the private instrument of partition dated April 30, 1944, assigned Lot 790 to Damaso, who had been in possession continuously, openly, and adversely from that date up to the time of decision. The Court ruled that, as successor in interest of his parents, Damaso had the right to sue for annulment, invoking Manresa, Spanish Civil Code, vol. 8, p. 373.

In addressing the fourth assignment of error, the appellants claimed the lower court erred in not declaring appellees in default upon their counterclaim (cross-complaint) because the latter allegedly did not file an answer. The Supreme Court held the claim to be unavailing. It found that appellants never requested a declaration of default. Moreover, it held that the allegations in the so-called cross-complaint established that appellants’ cause of action was already barred on the face of the pleadings, since they alleged that appellees had been in possession since 1941 and that appellants had been deprived of the products until the filing of the answer on April 21, 1956.

The Court also disposed of the remaining points by stating that the last assignment of error was “clearly without merit,” and it relied on the binding nature of the lower court’s fact findings due to the waiver of questions of fact.

Legal Basis and Reasoning of the Supreme Court

The Supreme Court’s affirmance rested on two interlocking lines of reasoning: first, procedural and timing issues related to the discovery and filing of the action; and second, substantive standing tied to succession and the effect of the deed of partition found by the trial court.

On timing, the Court treated the operative fact as the lower court’s finding regarding when the fraud was discovered. Once discovery was fixed at 1950 or 1951, the filing on January 3, 1952 fell within the four-year period.

On standing, the Court rejected the argument that only contracting parties could sue. It emphasized that Damaso’s right to challenge the void and fictitious deeds derived from his position as a successor in interest under Exhibit D, which the t

Case Syllabus (G.R. No. L-11765)

Parties and Procedural Posture

Damaso Descutido and Regina Decierdo acted as plaintiffs to annul two conveyances involving Lot No. 790 of the Cadastral Survey of Dumangas, Iloilo.
The defendants included Jacinto Baltazar and other defendants surnamed Baltazar as well as Pedro Diamante and Cristina Doctolero.
The Baltazar defendants appealed from a Court of First Instance of Iloilo judgment that nullified Exhibits B and C and ordered cancellation of Transfer Certificate of Title No. 25284 in Bonifacia’s name.
The appeal was taken by notice originally indicating an appeal to the Court of Appeals, but the Baltazars later sought leave to substitute “Supreme Court” on the stated ground that the appeal involved practically questions of law.
The Court treated the Baltazars as having waived the right to raise questions of fact and thereby bound them to the trial court’s factual findings.

Key Factual Background

The property Lot No. 790 was initially held by spouses Jose Descutido and Matea Dolduco, covered by Original Certificate of Title No. 31060.
The spouses’ title was cancelled after registration of an alleged deed of sale (Exhibit B) dated December 10, 1937 in favor of Pedro Diamante, leading to Transfer Certificate of Title No. 20491.
That transfer was later cancelled after registration of another alleged deed of sale (Exhibit C) dated June 1, 1940 by Diamante in favor of Bonifacia Descutido, resulting in Transfer Certificate of Title No. 25284 issued on May 28, 1941.
The trial court found that Jose Descutido died in August 1944, leaving children including Damaso (plaintiff-appellee) and Bonifacia, the latter married to Jacinto Baltazar.
The Baltazar defendants were included as defendants as surviving heirs of Bonifacia.
The trial court found that Diamante never possessed the property and that he only learned the true nature of the documents decades later during disputes over possession.

Trial Court Findings on Documents

The trial court found that in 1937 Pedro Descutido bought a fishpond from Pedro Diamante for P3,000.00, paying P500.00 at contract signing and obligating the balance of P2,500.00 to be secured by a mortgage to be executed by Jose Descutido (Pedro’s father).
The trial court found that instead of the mortgage, Jose was made to sign Exhibit B, which was treated as a deed of sale.
The trial court found that in 1940, when Pedro could not pay the unpaid balance, Pedro agreed to return the fishpond to Diamante, and the P500.00 became rent as payment of rentals.
The trial court found that Diamante was made to sign a document believing it cancelled the purported mortgage executed by Jose, but the trial court found it actually functioned as Exhibit C, a deed of sale in favor of Bonifacia Descutido.
The trial court found that Diamante delivered the instrument together with the title and papers to Jacinto Baltazar, who claimed representation of his father-in-law.
The trial court found no payment by Diamante of P3,360.00 stated as consideration in Exhibit B, and no receipt by Diamante of P200.00 stated as consideration of Exhibit C.
The trial court found that Diamante only came to know the documents’ true nature in 1950, when Damaso and Jacinto Baltazar had a possession dispute investigated by the Chief of Police of Dumangas.
The trial court further found that Damaso became aware of Exhibits B and C and the title in Bonifacia’s name only in 1951, when Jacinto attempted to take possession from him.

Claims and Defenses Asserted

The plaintiffs alleged that Exhibits B and C were fraudulent, fictitious, and unsupported by valid and sufficient consideration, and thus sought their annulment.
The Baltazar defendants denied material averments in part and asserted affirmative defenses that the plaintiffs’ cause of action was barred, that plaintiffs lacked legal capacity to sue, and that they were purchasers in good faith and for valuable consideration.
The Baltazar defendants also filed a counterclaim (erroneously designated as a cross-complaint) seeking amounts representing the products of the land from 1941 to December 31, 19