HEIRS OF SHOMANAY PACLIT, CATURAY PACLIT AND ANDRES PACLIT, NAMELY: SPOUSES PRIMO AND PATRICIA TEOFILO, LETICIA OLMAN, PRESCILLA OLMAN, WILLY OLMAN, JR., SAMUEL OLMAN, RAQUEL OL…

Heirs of Paclit versus Belisario

The Case

This is a petition for review on certiorari brought by the heirs of Shomanay Paclit, Caturay Paclit and Andres Paclit against Cesar Belisario and his wife Salud Belisario. The petitioners sued to reconvey a parcel of land in La Trinidad, Benguet, to annul the deed of sale with real estate mortgage that their predecessors executed in favor of Cesar, and to annul the certificates of title issued in his name. The case matters to a reviewee for two reasons: it shows how the Supreme Court treats a judgment that has already become final and executory, and it shows that a court may dismiss a complaint on the ground of prescription even when the defendant never pleaded that defense.

Procedural History

The petitioners filed their complaint for reconveyance, annulment of deed of sale with real estate mortgage, and annulment of certificates of title before the Regional Trial Court of La Trinidad, Benguet. The respondents moved to dismiss on the ground that the correct docket fees were not paid. The trial court issued a resolution dismissing the complaint, but on the ground of prescription, holding that an action upon a written contract prescribes in ten years and that the Torrens registration was notice to the whole world. The petitioners appealed to the Court of Appeals, which affirmed the dismissal and added that their inaction for thirty eight years constituted laches. The petitioners moved for reconsideration, but the appellate court denied it, pointing out that the decision had already become final because the motion was filed beyond the reglementary period. The petitioners then came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Shomanay Paclit, Caturay Paclit and Andres Paclit were the registered owners of a parcel of land in Alapang, La Trinidad, Benguet, consisting of 75,824 square meters and covered by Transfer Certificate of Title Number T-2370. On March 31, 1965, they sold the land to Cesar Belisario by a Deed of Sale with Real Estate Mortgage. They acknowledged receiving 31,500 pesos as downpayment, with the balance of 67,071 pesos to be paid within six months. To secure that balance, Cesar mortgaged the land back in favor of the sellers.

On March 2, 1966, Cesar executed an Acknowledgement of Indebtedness admitting that he had paid only 61,751 pesos, leaving a balance of 36,820 pesos, and stating that the sellers had already discharged the mortgage. Transfer Certificate of Title Number T-2370 was cancelled and Title Number 2832 was issued in the name of Cesar.

On August 13, 2003, the heirs filed their complaint, asserting that the balance of the purchase price was never paid and that the cancellation of the mortgage was attended by fraud. They claimed they discovered the sale and the cancellation only in July 1999, after thirty three years.

Issues

• Whether or not the Court of Appeals decision had already become final and executory, barring review by the Supreme Court.
• Whether or not the trial court may dismiss a complaint on the ground of prescription even if the defendant did not raise that defense in the motion to dismiss.
• Whether or not the petitioners' action for reconveyance, annulment of deed of sale and annulment of certificates of title was already barred by prescription.

Applicable Provisions

Section 1 of Rule 9 of the Rules of Court provides:

Section 1. Defenses and objections not pleaded. - Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.

This provision is the basis for the rule that prescription may be noticed by the court on its own motion when the facts showing it appear on the record.

Article 1144 of the Civil Code provides:

Article 1144. The following actions must be brought within ten years from the time the right of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment.

This is the prescriptive period the Court applied to the petitioners' action, which it characterized as one for rescission under Article 1191.

Article 1191 of the Civil Code provides:

Article 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.

This is the substantive basis for the action, which the Court treated as an action for rescission founded on a written contract.

Ruling

On the first issue, the Court held that the petition must fail because the Court of Appeals decision had already become final and executory. The petitioners received a copy of the decision on January 5, 2009, as shown by the Registry Return Receipt, not on February 28, 2009 as they claimed. They therefore had until January 20, 2009 to appeal or move for reconsideration, but they filed their motion only on March 11, 2009. The Court stressed that once a judgment attains finality it becomes immutable and unalterable, and may no longer be modified even to correct a perceived error of fact or law. The winning party has a correlative right to enjoy the finality of the resolution of the case, and public interest demands an end to every litigation.

On the second issue, the Court held that the trial court could dismiss the complaint on the ground of prescription even though the respondents did not raise it in their motion to dismiss. Section 1 of Rule 9 is categorical, and the Court added that what is essential is that the facts demonstrating the lapse of the prescriptive period be sufficiently and satisfactorily apparent on the record, either in the averments of the complaint or as established by the evidence.

On the third issue, the Court held that the suit was in reality an action for rescission under Article 1191, because the petitioners primarily sought the annulment of the deed of sale on the ground of non-payment of the full purchase price. Reconveyance and annulment of the certificates of title would prosper only if the deed of sale were first annulled. As an action based on a written contract, rescission prescribes in ten years under Article 1144. The petitioners' right of action accrued in September 1965, six months after the execution of the deed, when the balance fell due. The complaint was filed only on August 13, 2003, about thirty eight years later, so prescription had set in. The Court also quoted its ruling that prescription is a statute of repose whose object is to suppress fraudulent and stale claims from springing up at great distances of time, and that our laws do not favor property rights hanging in the air, uncertain, over a long span of time.

Doctrine

First, a judgment that has attained finality becomes immutable and unalterable and may no longer be modified in any respect, even if the modification is meant to correct a perceived error of fact or law, and regardless of whether the modification is attempted by the court rendering it or by the highest court of the land.

Second, under Section 1 of Rule 9, a court may dismiss a claim on its own motion when it appears from the pleadings or the evidence on record that the action is barred by the statute of limitations, even if the defendant never pleaded prescription. What is essential is that the facts showing the lapse of the prescriptive period be sufficiently and satisfactorily apparent on the record.

Third, an action to annul a deed of sale on the ground of the buyer's non-payment of the purchase price is in substance an action for rescission under Article 1191, and as an action upon a written contract it prescribes in ten years under Article 1144, counted from the time the right of action accrues.

Disposition

The petition was denied and the Court of Appeals decision was affirmed, so the respondents prevailed and the complaint remained dismissed.

Remember This

The one line worth memorizing is that once a judgment attains finality it becomes immutable and unalterable, and that prescription may be noticed by the court on its own motion when the facts appear on the record. Examiners like to use this case on the finality of judgments, on the belated motion for reconsideration, and on the rule that a suit to annul a sale for non-payment of the price is a rescission action that prescribes in ten years.