Case Summary (G.R. No. 125715)
Factual Background
The spouses Rafael Marquez, Sr. and Felicidad Marquez acquired a parcel of land of 161 square meters in San Juan Del Monte, Rizal, and constructed the conjugal home thereon. They had twelve children, among them the petitioners and private respondents Alfredo and Belen. After Felicidad died intestate in 1952, Rafael Sr. executed an Affidavit of Adjudication in 1982 purporting to vest sole ownership in himself, and TCT No. 33350 was issued in his name on June 16, 1982. On December 29, 1983, Rafael Jr. executed a Deed of Donation Inter Vivos conveying the land and house to Alfredo and Belen to the exclusion of the other siblings, and title was reflected in TCT No. 47572 in the names of the donees.
Trial Court Proceedings
Petitioners, joined later by Rafael Jr., filed a complaint for "Reconveyance and Partition with Damages" on May 31, 1991, alleging that the Affidavit of Adjudication and Deed of Donation Inter Vivos were fraudulent and that the private respondents took advantage of their father's advanced age. The private respondents pleaded prescription, asserting that the action was barred because it should have been filed within four years from discovery of the fraud. After trial, the court rendered judgment on April 29, 1993, in favor of the petitioners and held that the documents and the titles issued pursuant thereto were null and void ab initio and not subject to prescription.
Court of Appeals Ruling
On appeal, the Court of Appeals reversed on April 29, 1996. The CA relied on Gerona v. de Guzman and held that an action to annul documents procured by fraud must be filed within four years from discovery of the fraud. It deemed discovery to have occurred on June 16, 1982, when TCT No. 33350 was issued, and concluded that the petitioners’ complaint filed on May 31, 1991, was filed beyond the four-year period and was therefore time-barred.
Issue Presented on Review
The principal issue before the Supreme Court was whether the action for reconveyance filed by the petitioners had prescribed, and if so, whether the shorter prescription applied under the doctrine relied upon by the Court of Appeals or the longer period applicable to obligations created by law.
Petitioners’ Contentions
Petitioners contended that the fraudulent Affidavit of Adjudication and Deed of Donation Inter Vivos created a constructive trust in favor of the rightful heirs and that an action for reconveyance arising from an implied or constructive trust prescribes in ten years. They argued that the prescriptive period should run from the issuance of the Torrens title in 1982 and that their suit filed in 1991 was within ten years.
Respondents’ Contentions
The private respondents maintained that the action was barred by prescription under the rule applied in Gerona v. de Guzman, which, under the old Code of Civil Procedure, allowed four years from discovery of fraud to annul instruments procured by fraud. They argued that discovery occurred upon issuance of TCT No. 33350 on June 16, 1982, rendering the May 31, 1991 action untimely under a four-year rule.
Supreme Court Ruling
The Supreme Court reversed the decision of the Court of Appeals and reinstated the trial court judgment except as to the award of attorneys' fees, which it deleted. The Court held that the action for reconveyance based on an implied or constructive trust prescribed in ten years and that prescription began to run upon issuance of TCT No. 33350 on June 16, 1982; thus the complaint filed on May 31, 1991 was within the ten-year prescriptive period and was not barred.
Legal Basis and Reasoning
The Court explained that constructive trusts arise by operation of equity against one who, by fraud, duress or abuse of confidence, obtains or holds legal title which he ought not to hold, citing Article 1456 and pertinent authorities. The Court distinguished Gerona v. de Guzman, observing that its four-year rule was grounded in the old Code of Civil Procedure (Act No. 190) and that with the effectivity of the present Civil Code on August 30, 1950 the prescriptive periods are now governed by Articles 1139 to 1155. Because implied or constructive trusts constitute obligations created by law, the Court invoked Article 1149 to apply a ten-year prescription. The Court therefore fixed the commencement of prescription at the issuance of the Torrens title in 1982 and found that the action was timely.
Application of Succession and Trust Principles
The Court noted that the land constituted conjugal property of Rafael Sr. and Felicidad and that ownership would be equally divided between them. When Rafael Sr. misrepresented that he was the sole surviving heir and secured title in his name, a constructive trust arose for the portion belonging to his deceased wife an
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Case Syllabus (G.R. No. 125715)
Parties and Procedural Posture
- Petitioners were Ricardo F. Marquez, Aurea M. Cabezas, Exequiel F. Marquez, Salvador F. Marquez, Antonio F. Marquez, and Rafael F. Marquez, Jr., who sued for reconveyance and partition with damages.
- Respondents were the Court of Appeals as appellee in the administrative review and private respondents Alfredo F. Marquez and Belen F. Marquez as titleholders and possessors of the disputed land.
- The trial court ruled in favor of the Petitioners and annulled the challenged documents and titles.
- The Court of Appeals reversed the trial court and dismissed the action as barred by prescription.
- The matter was elevated to the Supreme Court by the Petitioners to challenge the finding of prescription.
Key Factual Allegations
- The spouses Rafael Marquez, Sr. and Felicidad Marquez acquired a 161-square-meter parcel in San Juan Del Monte and constructed their conjugal home.
- Felicidad Marquez died intestate in 1952, leaving the spouses and their children as heirs under the Civil Code.
- On June 16, 1982, Rafael Marquez, Sr. executed an Affidavit of Adjudication and obtained TCT No. 33350 in his name.
- On December 29, 1983, Rafael Marquez, Jr. executed a Deed of Donation Inter Vivos conveying the property to three children, resulting in issuance of TCT No. 47572 in the private respondents' names.
- From 1983 to 1991, the private respondents were in actual possession, and the other children only discovered the new title and alleged deprivation thereafter.
- The Petitioners, joined by Rafael Jr., filed their complaint for reconveyance and partition with damages on May 31, 1991, alleging fraud and undue advantage of an aged parent.
Procedural History
- The trial court rendered judgment on April 29, 1993, declaring the affidavit of adjudication, deed of donation, and the corresponding Torrens certificates null and void ab initio, and ruled for reconveyance and partition.
- The Court of Appeals reversed on April 29, 1996, holding that the action was time-barred under the four-year rule for actions based on fraud as announced in Gerona v. de Guzman.
- The Petitioners' motion for reconsideration before the Court of Appeals was denied and the matter was elevated to the Supreme Court.
Issues Presented
- Whether the action for reconveyance based on the alleged fraudulent Affidavit of Adjudication and Deed of Donation Inter Vivos had prescribed.
- Whether a constructive trust arose from the fraudulent acts which would affect the prescriptive period applicable to the reconveyance action.
- Whether Petitioners were entitled to moral damages and attorneys' fees.
Petitioners' Contentions
- Petitioners contended that the challenged instruments created a constructive trust under Article 1456, rendering the action one for reconveyance grounded on implied trust which prescribes in ten years.
- Petitioners asserted that prescription should therefore be counted from issuance of the Torrens title in 1982 and that their complaint filed in 1991 was within the ten-year period.
- Petitioners alleged that the Aff