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Vda. de Portugal vs. Intermediate Appellate Court

*
No. L-73564. March 25,1988.

CORNELIA CLANOR VDA. DE PORTUGAL,

FRANCISCO C. PORTUGAL, PETRONA C. PORTUGAL,
CLARITA PORTUGAL, LETICIA PORTUGAL, and
BENEDICTO PORTUGAL, JR., petitioners, vs.
INTERMEDIATE APPELLATE COURT and HUGO C.
PORTUGAL, respondents.

Civil Law; Contracts; Property; Sale; Where the contract of

sale is vitiated by the total absence of a valid cause or
consideration, the contract is void or inexistent; Deed of sale is void
ab initio or inexistent not merely voidable.—More than these, the
alleged contract of sale is vitiated by the total absence of a valid
cause or consideration. The petitioners in their complaint, assert
that they, particularly Cornelia, never knew of the existence of
the questioned deed of sale. They claim that they came to know of
the supposed sale only after the private respondent, upon their
repeated entreaties to produce and return the owner’s duplicate
copy of the transfer certificate of title covering the

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* SECOND DIVISION.

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Vda. de Portugal vs. Intermediate Appellate Court

two parcels of land, showed to them the controversial deed. And

their claim was immeasurably bolstered when the private
respondent’s co defendant below, his brother Emiliano Portugal,
who was allegedly his co-vendee in the transaction, disclaimed

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any knowledge or participation therein. If this is so, and this is

not contradicted by the decisions of the courts below, the
inevitable implication of the allegations is that contrary to the
recitals found in the assailed deed, no consideration was ever paid
at all by the private respondent. Applying the provisions of
Articles 1350, 1352, and 1409 of the new Civil Code in relation to
the indispensable requisite of a valid cause or consideration in
any contract, and what constitutes a void or inexistent contract,
we rule that the disputed deed of sale is void ab initio or
inexistent, not merely voidable.
Same; Same; Same; Same; Prescription; An action or defense
for the declaration of the inexistence of a contract does not
prescribe.—And it is provided in Article 1410 of the Civil Code,
that "(T)he action or defense for the declaration of the existence of
a contract does not prescribe.”
Same; Same; Same; Same; Same; The action for reconveyance
of a parcel of land based on an implied or constructive trust in
case at bar is seasonably filed, as the action prescribes in 10 years
from date of registration of the deed or the date of the issuance of
the certificate of title over the property.—But even if the action of
the petitioners is for reconveyance of the parcel of land based on
an implied or constructive trust, still it has been seasonably filed.
For as heretofore stated, it is now settled that actions of this
nature prescribe in ten years, the point of reference being the date
of registration of the deed or the date of the issuance of the
certificate of title over the property.
Same; Same; Same; Same; Same; Credibility of witnesses; The
trial court’s findings on the credibility of witnesses; deserve full
respect; Exceptions do not apply in case at bar.—On the credibility
of witnesses presented in court, there is no doubt that the trial
court’s findings on this score deserves full respect and we do not
have any reason to disturb it here now. After all, the trial court
judge is in a better position to make that appreciation for having
heard personally the witnesses and observed their deportment
and manner of testifying during the trial. The exceptions to this
time honored policy are: when the trial court plainly overlooked
certain facts of substantial import and value which if only
correctly considered by the court might change the outcome of the
case; and, if the judge who rendered the decision was not the one
who heard the evidence. Neither of these exceptions is

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present here. Therefore, the respondent appellate court’s ruling

questioning the credibility of petitioner Cornelia Clanor Vda. de
Portugal must be reversed.
Same; Same; Same; Same; Same; Defense of prescription,
although not raised by the defendant, may nevertheless be passed
upon by the court when its presence is plainly apparent on the face
of the complaint itself.—Anent the last issue raised by the
petitioner, we have already ruled that the defense of prescription
although not raised by the defendant may nevertheless be passed
upon by the court when its presence is plainly apparent on the
face of the complaint itself. At any rate, in view of our earlier
finding that the deed of sale in controversy is not simply
fraudulent but void ab initio, or inexistent, our ruling on this
third issue would not have any material bearing on the overall
outcome of this petition. The petitioner’s action remains to be
seasonably instituted.

SARMIENTO, J.:
1
Seeking the reversal of the decision dated October 21, 1985
of the former Intermediate Appellate Court in CA-G.R. CV
No. 70247, entitled “Cornelia Clanor Vda. de Portugal, et
al. vs. 2Hugo Portugal,” and the reinstatement of the
decision in their favor, dated June 30, 1980, of the Court of
First Instance of Cavite in Civil Case No. NC-699 entitled
“Cornelia Vda. de Portugal, et al. vs. Hugo Portugal,” the
petitioners now come to us by way of this petition for
review by certiorari.
The factual background that gave rise to the present
controversy is summarized as follows:
Petitioner Cornelia Clanor and her late husband
Pascual Portugal, during the lifetime of the latter, were
able to accumulate several parcels of real property. Among
these were a parcel of residential land situated in
Poblacion, Gen. Trias, Cavite, designated as Lot No. 3201,
consisting of 2,069 square meters, more or less, and covered
by T.C.T. No. RT-9355, in their names, and an agricultural
land located at Pasong Kawayan, Gen. Trias, Cavite, with
an area of 43,587 square meters, more

______________

1 Ejercito, Bienvenido, J., Coquia, Jorge, Zosa, Mariano, and Castro-

Bartolome, Floreliana, JJ.,concurring.
2 Rendered by Judge Pablo D. Suarez.

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or less, known as Lot No. 2337, and also registered in their

names under T.C.T, No. RT-9356 of the Registry of Deeds
for the Province of Cavite.
Sometime in January, 1967, the private respondent
Hugo Portugal, a son of the spouses, borrowed from his
mother, Cornelia, the certificates of title to the above-
mentioned parcels of land on the pretext that he had to use
them in securing a loan that he was negotiating. Cornelia,
the loving and helpful mother that she was, assented and
delivered the titles to her son. The matter was never again
brought up until after Pascual Portugal died on November
17, 1974. (Cornelia herself died on November 12, 1987.)
When the other heirs of the deceased Pascual Portugal, the
petitioners herein, for the purposes of executing an extra-
judicial partition of Pascual’s estate, wished to have all the
properties of the spouses collated, Cornelia asked the
private respondent for the return of the two titles she
previously loaned, Hugo manifested that the said titles no
longer exist. When further questioned, Hugo showed the
petitioners Transfer Certificate of Title (T.C.T.) No. 23539
registered in his and his brother Emiliano Portugal’s
names, and which new T.C.T. cancelled the two previous
ones. This falsification was triggered by a deed of sale by
which the spouses Pascual Portugal and Cornelia Clanor
purportedly sold for P8,0000.00 the two parcels of land
adverted to earlier to their two sons, Hugo and Emiliano.
Confronted by his mother of this fraud, Emiliano denied
any participation. And to show his good faith, Emiliano
caused the reconveyance of Lot No. 2337 previously covered
by TCT No. RT-9356 and which was conveyed to him in the
void deed of sale. Hugo, on the other hand, refused to make
the necessary restitution thus compelling the petitioners,
his mother and his other brothers and sisters, to institute
an action for the annulment of the controversial deed of
sale and the reconveyance of the title over Lot No. 3201
(the residential land). After hearing, the trial court
rendered its decision, the dispositive portion of which
reads:

x x x       x x x      x x x
WHEREFORE, under our present perspectives, judgment is
hereby rendered; and the Court hereby declares inoperative the
Deed of Sale (Exhibit A and Exhibit 1) and all its appertaining
and subse-

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Vda. de Portugal vs. Intermediate Appellate Court

quent documents corresponding with Transfer Certificate of Title

No. T-23539 of the Register of Deeds for the Province of Cavite, as
well as all subsequent Transfer Certificates of Title which may
have been produced corresponding to the parcels of land, subject
matter hereof 3
SO ORDERED.

From this decision, Hugo Portugal, the private respondent

herein and the defendant in the trial court, appealed to the
respondent appellate court which reversed, hence the
present petition.
The issues raised by the petitioners are:

1. Whether or not the present action has prescribed;

2. Whether or not the respondent court was justified
in disturbing the trial court’s findings on the
credibility of the witnesses presented during the
trial; and
3. Whether or not the appellate court could entertain
the defense of prescription which was not raised by
the private respondents in their answer to the
complaint nor in a motion to dismiss.

We find the petition meritorious.

There is really nothing novel in this case as all the
issues raised had been, on several occasions, ruled upon by
the Court, Apropos the first issue, which is the timeliness
of the action, the trial court correctly ruled that the action
instituted by the petitioners has not yet prescribed. Be that
as it may, the conclusion was reached through an
erroneous rationalization, i.e., the case is purely for
reconveyance based on an implied or constructive trust
Obviously, the trial court failed to consider the lack of
consideration or cause in the purported deed of sale by
which the residential lot was allegedly transferred to the
private respondent by his parents. On the other hand, the
respondent Intermediate Appellate Court held that since
the action for reconveyance was fathered by a fraudulent
deed of sale, Article 1391 of the Civil Code which lays down
the rule that an action to annul a contract based on fraud
prescribes in four years, applies. Hence, according to the
respondent court, as more than four years had elapsed
from January 23, 1967 when the as-
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_________________

3 Decision of the Court of First Instance; Record on Appeal (to the Court
of Appeals), Annex “D" of Petition, 28.

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Vda. de Portugal vs. Intermediate Appellate Court

sailed deed was registered and the petitioners’ cause of

action supposedly accrued, the suit has already become
stale when it was commenced on October 26, 1976, in the
Court of First Instance of Cavite. For reasons shortly to be
shown, we can not give our imprimatur to either view.
The case at bar is not purely an action for reconveyance
based on an implied or constructive trust. Neither is it one
for the annullment of a fraudulent contract. A closer
scrutiny of the records of the case readily supports a
finding that fraud and mistake are not the only vices
present in the assailed contract of sale as held by the trial
court. More than these, the alleged contract of sale is
vitiated by the total absence of a valid cause or
consideration. The petitioners in their complaint, assert
that they, particularly Cornelia, never knew of the
existence of the questioned deed of sale, They claim that
they came to know of the supposed sale only after the
private respondent, upon their repeated entreaties to
produce and return the owner’s duplicate copy of the
transfer certificate of title covering the two parcels of land,
showed to them the controversial deed. And their claim
was immeasurably bolstered when the private respondent’s
co-defendant below, his brother Emiliano Portugal, who
was allegedly his co-vendee in the transaction, disclaimed
any knowledge or participation therein. If this is so, and
this is not contradicted by the decisions of the courts below
the inevitable implication of the allegations is that contrary
to the recitals found in the assailed deed, no consideration
was ever paid at all by the private respondent. Applying
the provisions of Articles 1350, 1352, and 1409 of the new
Civil Code in relation to the indispensable requisite of a
valid cause or consideration in any contract, and what
constitutes a void or inexistent contract, we rule that the
disputed deed of sale is void ab initio or inexistent, not
merely voidable. And it is provided in Article 1410 of the
Civil Code, that "(T)he action or defense for the declaration
of the inexistence of a contract does not prescribe.”

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But even if the action of the petitioners is for

reconveyance of the parcel of land based on an implied or
constructive trust, still it has been seasonably filed. For as
heretofore stated, it is now settled that actions of this
nature prescribe in ten years, the point of reference being
the date of registration of the deed or
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Vda. de Portugal vs. Intermediate Appellate Court

the date 4of the issuance of the certificate of title over the
property. In this case, the petitioner commenced the
instant action for reconveyance in the trial court on
October 26, 1976, or less than ten years from January 23,
1967 when the deed 5
of sale was registered with the
Register of Deeds. Clearly, even on this basis alone, the
present action has not yet prescribed.
On the credibility of witnesses presented in court, there
is no doubt that the trial court’s findings on this score
deserves full respect 6
and we do not have any reason to
disturb it here now. After all, the trial court judge is in a
better position to make that appreciation for having heard
personally the witnesses and observed their 7
deportment
and manner of testifying during the trial. The exceptions
to this time honored policy are: when the trial court plainly
overlooked certain facts of substantial import and value
which if only correctly considered 8
by the court might
change the outcome of the case; and, if the judge who
rendered 9 the decision was not the one who heard the
evidence. Neither of these exceptions is present here.
Therefore, the respondent appellate court’s ruling
questioning the credibility of petitioner Cornelia Clanor
Vda. de Portugal must be reversed.
Anent the last issue raised by the petitioner, we have
already ruled that the defense of prescription although not
raised by the defendant may nevertheless be passed upon
by the court when its presence is plainly apparent on the
face of the com-

___________________

4 Amerol v. Bagumbaran, No. L-33261, September 30, 1987.

5 Decision of the Intermediate Appellate Court, 10, Rollo, 31.
6 People Villeza, No. L-56113. January 31, 1984, 127 SCRA 349 (1984);
People vs. Palong, No. L-33271, February 20, 1984, 127 SCRA 529 (1984);

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People vs. De Leon, No, L-36443, March 8,1984,128 SCRA 121 (1984);
People vs. Cabanit, No. L-62030–31, October 4, 1985, 139 SCRA 94 (1985).
7 People vs. Olalia, Jr., No L-50669, March 12,1984,128 SCRA 139
(1984); People vs. Pelias Jones, No. L-61165, June 24, 1985,137 SCRA 166
(1985).
8 People vs, Olalia, Jr, supra,
9 People vs. Escalante, No. L-37147, August 22, 1984, 131 SCRA
237(1984).

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10
plaint itself. At any rate, in view of our earlier finding
that the deed of sale in controversy is not simply
fraudulent but void ab initio, or inexistent, our ruling on
this third issue would not have any material bearing on the
overall outcome of this petition. The petitioner’s action
remains to be seasonably instituted.
WHEREFORE, the petition is hereby GRANTED; the
Decision dated October 21, 1985 and the Resolution dated
January 24, 1986 of the Intermediate Appellate Court are
hereby REVERSED and SET ASIDE; the deed of sale dated
January 23, 1967 evidencing the sale of Lot No. 3201 to
private respondent Hugo Portugal is declared VOID AB
INITIO; and the private respondent is ORDERED to
reconvey to petitioners the title over the said Lot No. 3201
which is now under TCT No. T23539. Costs against the
private respondent
SO ORDERED.

          Yap (Chairman), Melencio-Herrera, Paras and

Padilla, JJ., concur.

Petition granted.

Note.—A void or inexistent contract is one which has no

force and effect from the very beginning, as if it had never
been entered into, and which cannot be validated either by
time or ratification.(Tongoy vs. Court of Appeals 123 SCRA
99.)

——oOo——

_________________

10 Garcia vs. Mathis, No. L-48577, September 30, 1980, 100 SCRA 250
(1980) citing: Philippine National Bank vs. Pacific Commission House, No.
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L-22675, March 28,1969, 27 SCRA 766 (1969).

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