1174 SUPREME COURT REPORTS ANNOTATED

Descutido vs. Baltazar

No. L-11765. April 29, 1361.

DAMASO DESCUTIDO, ET AL., plaintiffs-appellees, vs.

JACINTO BALTAZAR, ET AL., defendants-appellants.

Prescription; Contracts; Action for annulment should be filed

within four years from discovery of fraud.—The four years within
which an action to annul a contract on the ground of fraud may be
filed is counted from the discovery of the fraud and not from the
execution of the contract.

Same; Actions; Successors-in-interest may bring suit.—

Successors-in-interest of parties to a contract may sue for the
annulment of that contract.

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VOL. 1, APRIL 29, 1961 1175

Descutido vs. Baltazar

Pleading and practice; Default; Counterclaim; When fHaintiff

failed to answer counterclaims.—While it is true that the
plaintiffs did not file an answer to the counterclaim, it is
nonetheless true that the defendants never asked the court to
declare said plaintiffs in default.

APPEAL from a judgment of the Court of First Instance of

Iloilo. Querubin, J.
The facts are stated in the opinion of the Court.
Del Rosario & Del Rosario for plaintiffs-appellees
Jose M. Cordova for defendants-appellants.

DIZON, J.:

Appeal from the decision of the Court of First Instance of

Iloilo, the dispositive part of which reads as follows:
"IN VIEW THEREOF, the court hereby declares the deed of sale
executed by Jose Descutido and Matea Dolduco in favor of Pedro
Diamante (Exh. B) and the deed of sale executed by Pedro
Diamante in favor of Bonifacia Descutido (Exh. C) null and void
and non-existent. By virtue of the deed of partition (Exh. D)
Damaso Descutido is hereby declared owner of the Lot No. 790 of
the Cadastral Survey of Dumangas. The register of deeds of Iloilo
is hereby ordered to cancel the transfer certificate of title No.
25284 in the name of Bonifacia Descutido and to issue another
one in the name of Damaso Descutido married to Regina
Decierdo, of age, Filipino and resident of Dumangas, Iloilo,
Philippines. No costs and damages. The counter-claim is hereby
dismissed."

The spouses Jose Descutido and Matea Dolduco were the

registered owners of Lot No. 790 of the Cadastral Survey of
Dumangas, Iloilo, covered by Original Certificate of Title
No. 31060 issued in their name. Said title was cancelled
upon registration of a deed of sale (Exh. B) dated December
10, 1937 allegedly executed by said spouses in favor of
Pedro Diamante, in whose name Transfer Certificate of
Title No. 20491 was issued. Subsequently, this transfer
certificate of title was also cancelled upon registration of
another deed of sale executed by Diamante in favor of
Bonifacia Descutido on June 1, 1940 (Exh. C), and Transfer
Certificate of Title No. 25284 was issued on May 28,1941 in
the name of the latter (Exh. 2).
Upon the evidence the lower court found that Jose
Descutido died in the month of August, 1944 leaving three

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1176 SUPREME COURT REPORTS ANNOTATED

Descutido vs. Baltazar

children, namely, Damaso—appellee herein—Pedro and

Bonifacia, the latter married to appellant Jacinto Baltazar.
The other appellants surnamed Baltazar are the children of
the Baltazar spouses and were included as defendants in
the complaint as surviving heirs of Bonifacia. The other
defendants were the spouses Pedro Diamante and Cristina
Doctolero.
Damaso Descutido and his wife Regina Decierdo
commenced 'this action to annul the deeds of sale Exhibits
B and C upon the ground that they were fraudulent,
fictitious and were not supported by any valid and
sufficient consideration. Jacinto Baltazar and his children,
after making specific denials of some material averments of
the complaint and admitting others, alleged the following
affirmative defenses: (a) that plaintiffs' cause of action was
barred; (b) that plaintiffs had no legal capacity to sue for
the annulment of the sales mentioned in their complaint;
and (c) that they are purchasers in good faith and for
valuable consideration of Lot No. 790 of the Cadastral
Survey of Dumangas. Their answer also contained a
counterclaim which they erroneously designated as cross-
complaint. The substance of the allegations made therein is
that the Baltazar spouses bought Lot 790 of the Cadastral
Survey of Dumangas from Pedro Diamante; that by virtue
of the deed of sale and its registration, Diamante's title was
cancelled and Transfer Certificate of Title No. 25284 was
issued in their name; that after the sale they took
possession of the property, but in the year 1941 the spouses
Damaso Descutido and Regina Decierdo, by force and
intimidation, took possession of the property and have
remained in possession thereof up to the date when the
answer was filed (April 21. 1956); that they have thus been
deprived by the plaintiffs of the products of the property
from the year 1941 to December 31, 1950 consisting of forty
cavanes of palay yearly, besides other products with a total
value of P4,977.50. They prayed that the complaint be
dismissed and for judgment "ordering the plaintiffs to pay
to the herein defendants the sum of P4.977.50 as the
amount of the production of Lot 790 from 1941 to December
31, 1950; and 40 cavanes of palay yearly from January
1951 until the same are delivered to the possession of the
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VOL. 1, APRIL 29, 1961 1177

Descutido vs. Baltazar

herein defendants".
For their part, Diamante and his wife filed their own
answer which, as reproduced in the record on appeal, reads
as follows:

"Come now the defendants Pedro Diamante and Cristina

Doctolero in the above entitled case, and in answer to the
amended complaint to this Honorable Court most respectfully
state:

"1. That the defendants Pedro Diamante and Cristina

Doctolero admit the allegation mentioned in paragraphs 1
and 2 of the complaint;
 "2. That they have no sufficient knowledge or information to
form the belief as to the truth of the material allegation
mentioned in paragraphs 3, 4, 5, 6 and 7 of the complaint
and specifically deny the allegations in paragraphs 8, 9,
10, 11, 12, 13 and 14 thereof;
"3. That the defendants Pedro Diamante and Cristina
Doctolero are not aware that Lot No. 790 of the Cadastral
Survey of Dumangas was ever bought by them from the
original registered owners, Jose Descutido and Matea
Dolduco, the truth of the matter being that said
defendants never bought nor have been in possession of
said land even for a single minute of their lif e;
"4. That said defendants never sold the property
aforementioned to Bonifacia Descutido married to Jacinto
Baltazar;
"5. That the alleged sale, if any, of the property subject of this
litigation from the original registered owners to the
defendants herein (Pedro Diamante and Cristina
Doctolero) was fraudulently engineered by defendant
Jacinto Baltazar, sonin-law of the registered owners and
Notary Public Carlos Divinagracia, who is the son-in-law
of spouses Pedro Diamante and Cristina Doctolero;
"6. That with the cooperation of the said Jacinto Baltazar and
Carlos Divinagracia, the defendants spouses herein were
made to sign the alleged document of sale and other
transactions relative thereto, if ever they sign at all, of
which we were not aware and for which we received no
consideration.

"WHEREFORE, it is most respectfully prayed that defendants

spouses Pedro Diamante and Cristina Doctolero be absolved from
the complaint and Lot No. 790 of the Cadastral Survey of
Dumangas, be reconveyed to the plaintiffs."

After a trial on the issues thus raised, the lower court

rendered the decision from which only the Baltazars
appealed.
In their brief appellants submit five assignments of
error, the third of which might be said to raise questions of
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1178 SUPREME COURT REPORTS ANNOTATED

Descutido vs. BoMazar

fact dependent upon the credibility of appellees' witnesses.

It appears, however, that in their original notice of appeal
appellants stated that they were appealing to the Court of
Appeals, but in their petition of October 10, 1956 they
asked for leave—which was granted—to change the words
"Court of Appeals" to "Supreme Court" for the reason that
"the questions herein raised on appeal are all practically
questions of law" (Rec. on Ap., pp. 41, 46). They must,
therefore, be deemed to have waived their right to raise
questions of fact and, as a result, are bound by the findings
of fact made by the lower court. In this connection the
lower court found that the following additional facts have
been established:
In the year 1937 Pedro Descutido bought a fishpond
from Pedro Diamante for P3,000.00, of which he paid
P500.00 on the date they entered into the contract, and
obligated himself to pay the balance of P2,500.00 later on,
the payment to be secured by a mortgage to be executed by
Jose Descutido—Pedro's father. It turned out, however,
that Jose was made to sign instead the deed of sale Exhibit
B. In 1940, in view of Pedro's inability to pay the unpaid
balance, he agreed to return the fishpond to Diamante, the
P500.00 paid on account of the purchase price to be
considered as payment of rentals. Diamante was made to
sign a document which he believed to be one cancelling the
mortgage which Jose Descutido was supposed to have
executed in his favor, but it turned out to be a deed of sale
in favor of Bonifacia Descutido, now in the record as
Exhibit C. After the. execution thereof Diamante delivered
the same with the certificate of title and other papers
pertaining to the property subject matter of the instrument
to Jacinto Baltazar, husband of Bonifacia, who claimed to
be the representative of his father-in-law.
The lower court also found that Diamante had not paid
any part of the sum of P3.360.00 to Jose Descutido
mentioned as consideration in the deed of sale Exhibit B,
nor had he received from Bonifacia the sum of P200.00
mentioned as consideration of the sale evidenced by Exhibit
C; that he had never been in possession of the property
subject matter of the aforesaid deeds of sale: and that he
came to know that the document he was made to sign as a
can-
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VOL. 1, APRIL 29, 1961 1179

Descutido vs.:Baltazar

cellation of mortgage was in fact a deed of sale in favor Of

Bonifacia Descutido only in 1950 when Damaso Descutido
and his brother-in-law Jacinto Baltazar had a dispute over
the possession of the property which became the subject of
an investigation by the Chief of Police of Dumangas. The
lower court further found that Damaso became aware of
the existence of the deeds of sale Exhibits B and C and of
the transfer certificate of title in the name of her sister
Bonifacia only in 1951 when Jacinto Baltazar attempted to
take away the possession of the property from him.
In. view of the facts thus found by the lower court, it
'declared Exhibits B ,and C to be fraudulent, fictitious and
executed without any lawful consideration.
Appellants' claim in the first assignment of error that
the present action was already barred when it was
commenced on January 3, 1952 is untenable. It having
been found by the lower court that the fraud vitiating the
contracts in question was discovered by appellees only in
1950 or 1951, it is clear that the action was instituted well
within the period of four years from such discovery.
In the second assignment of error appellants contend
that appellees had no right to sue f or the annulment of
Exhibits B and C because they are not parties thereto. True
it is that appellees had no part in the execution of said
deeds of sale, but it appears that the lower court also found
that on April 30, 1944 the spouses Jose Descutido and
Matea Dolduco, on the one hand, and their three children
(Pedro, Damaso and Bonifacia), on the other, executed the
private instrument of participation Exhibit D by virtue of
which the property in question—Lot 790—was assigned to
Damaso who had been in possession thereof continuously,
openly; and adversely from April 30, 1944 up to the date of
the decision. Therefore, in his capacity as successor in
interest of his parents, Damaso had the right to sue for the
annulment of the aforesaid deeds of sale (Manresa, Spanish
Civil Code, vol. 8, p. 373).
With respect to the fourth assignment of error, suffice it
to state that it is not true that the lower court held that
.the private deed of partition dated April 30, 1944 (Exh. D)
is superior to the transfer certificate of title issued to
Bonifacia Descutido since May 28, 1941. What
1180

1180 SUPREME COURT REPORTS ANNOTATED

Navarro vs. Sugar Producers Cooperative Marketing
Association, Inc.

the court held was, firstly, that said certificate of title

should be cancelled and voided because it was issued on the
 strength of fraudulent and fictitious deeds of sale and,
secondly, that by virtue of the deed of partition already
mentioned, Damaso Descutido was entitled to bring the
present action.
Finally, appellants claim that the lower court erred in
not declaring appellees in default upon their cross-claim
(counterclaim) because the latter never filed an answer
thereto. It is true that appellees filed no answer to said
pleading, but it is nonetheless true that appellants never
asked the lower court to declare them in default. Upon the
other-hand, the allegations made in the so-called
crosscomplaint clearly show that appellants' cause of action
stated therein was already. barred in view of the express
allegation to the effect that since the year 1941 appellees
had been in possession of the property in question up to the
filing of appellants' answer (April 21, 1956), appropriating
for themselves all the products harvested therefrom. The
last assignment of error is, therefore, clearly without merit.
WHEREFORE, the decision appealed from is hereby
affirmed, without costs.

Bengzon, C.J., Bautista Angelo, Labrador,

Concepcion, Reyes, J.B.L., Barrera, and Paredes, JJ.,
concur.
Padilla, J., took no part.

Decision affirmed.

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