Title
Macababbad, Jr. vs. Masirag
Case
G.R. No. 161237
Decision Date
Jan 14, 2009
Heirs alleged fraud in property transfer via forged extrajudicial settlement; SC upheld CA, ruling action imprescriptible, remanding for fraud determination.
macababbad jr
masirag
court of appeals
A

Case Summary (G.R. No. 161237)

Factual Background

The property at issue is Lot No. 4144 (6,423 sq.m.), originally owned by spouses Pedro Masirag and Pantaleona Tulauan, evidenced by OCT No. 1946. Several children/heirs of the original owners are involved; petitioners allegedly acquired portions of the lot after a document titled “Extra-judicial Settlement with Simultaneous Sale of Portion of Registered Land (Lot 4144)” dated December 3, 1967 was purportedly executed. Respondents alleged they later discovered in March 1999 that their signatures were forged on that extrajudicial settlement and that the instrument deprived them of their hereditary shares. OCT No. 1946 was cancelled and the property was registered under TCT No. 13408; petitioners procured titles to subdivisions and sold portions to third parties. Respondents filed suit in 1999 alleging forgery, nullity of the extrajudicial settlement, and seeking reconveyance and cancellation of titles.

RTC Disposition

The RTC initially denied motions to dismiss but later, by Order dated May 29, 2000, dismissed the complaint on two grounds: (1) the action was barred by prescription because it was filed many years after the partition and transfers; and (2) failure to implead indispensable parties — specifically, other heirs and innocent purchasers with titles to portions of Lot 4144. The dismissal prompted an appeal to the Court of Appeals.

Issues Presented to the Court of Appeals

The respondents (appellants below) challenged the RTC’s dismissal, arguing that the RTC erred in dismissing the case for prescription and for non-joinder. They contended the complaint sufficiently alleged fraud and forgery rendering the extrajudicial settlement void ab initio and that their cause of action was therefore imprescriptible or, alternately, subject to a prescriptive period beginning only upon discovery of fraud. Petitioners argued the appeal to the CA was improper because the issues raised were pure questions of law appealable to the Supreme Court under Rule 45.

Court of Appeals Ruling

The CA took cognizance of the appeal and reversed the RTC dismissal, holding that the complaint adequately alleged actionable fraud and that the cause of action was not barred by prescription. The CA treated the challenged conveyance as vitiated by fraud and applied the doctrine of implied trust (a person who acquires property through fraud is trustee for the true owner) in conjunction with Civil Code provisions on void contracts (Arts. 1409 and 1410), concluding that an action to declare a contract void is imprescriptible when the primary relief sought is annulment of a void instrument.

Supreme Court Issues on Review

Petitioners brought a petition for review on certiorari to the Supreme Court principally asserting: (1) the Court of Appeals lacked jurisdiction because the questions were purely legal and thus should have been brought directly to the Supreme Court under Rule 45; (2) the RTC’s ruling on non-joinder of indispensable parties had become final; and (3) various alleged legal errors by the CA regarding prescription, the nature of the extrajudicial settlement, and the interplay of Civil Code provisions.

Supreme Court: Question of Law vs. Fact and Proper Mode of Appeal

The Supreme Court analyzed whether the CA correctly exercised jurisdiction via an ordinary appeal by determining whether the appeal raised mixed questions of fact and law (which the CA may review) or pure questions of law (which would require Rule 45). The Court emphasized the distinction: questions of law can be resolved without evaluating evidence; questions of fact require evidentiary assessment. The respondents’ notice of appeal and appellate brief raised issues regarding prescription, laches, and facts such as discovery date of the alleged fraud and who executed and participated in the extrajudicial settlement — matters necessitating factual determination. The Court therefore concluded that mixed questions of fact and law were involved and that the ordinary appeal to the CA was proper under Rule 41. The Court also reiterated that prescription may be either a question of law or a question of fact depending on whether factual matters (e.g., when the prescriptive period began to run or when fraud was discovered) must be resolved.

Supreme Court: Prescription (Imprescriptibility of Action to Declare Inexistence of Contract)

On prescription, the Supreme Court accepted that the respondents’ amended complaint sufficiently pleaded an action to declare the extrajudicial settlement void ab initio because of alleged forgery and lack of consent. The Court held that where the primary issue is the nullity or inexistence of a contract or instrument, Article 1410 (declaring such actions imprescriptible) controls; consequently, the cause of action to annul a void instrument is imprescriptible and will not be barred by lapse of time even if certificates of title were later issued. The Court relied on precedents (e.g., Ingjug-Tiro) holding that registration does not validate a contract or transfer that is null and void, and that issuance of a certificate of title does not change the imprescriptible nature of an action to declare the inexistence of a contract.

Supreme Court: Laches

The Court found laches inapplicable as a ground for dismissal at the pre-evidentiary stage. Laches is an equitable defense requiring evidentiary support; at the pleading stage the court may not resolve alleged laches from mere allegations in pleadings. The positive mandate of Article 1410 making actions for declaration of inexistence of contract imprescriptible was also held to preempt equitable arguments based solely on delay.

Supreme Court: Non-joinder and Indispensable Parties

The Supreme Court concluded that dismissal for non-joinder was improper at the time and stage when the RTC dismissed the complaint. Rule 3, Section 11 of the Rules of Court provides that misjoinder or nonjoinder is not a ground for dismissal and that parties may be added or dropped at any stage. The proper remedy for omission of indispensable parties is to implead or to order joinder; dismissal is justified only upon unjustified refusal to comply with a court order to include them. Moreover, the Court explained that whether particular persons are indispensable depends on the relief sought: in an action to declare

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