FIRST DIVISION

MARLENE CRISOSTOMO & G.R. No. 164787

PANGANIBAN, C.J.
Chairperson,
YNARES-SANTIAGO,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

Promulgated:
FLORITO M. GARCIA, JR.,
Respondent. January 31, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

On 20 June 2002, respondent Florito M. Garcia, Jr. filed Civil Case No. C-20128 for cancellation of
Transfer Certificate of Title (TCT) No. 273165 of the Registry of Deeds of Caloocan City against
petitioners-spouses Marlene and Jose Crisostomo raffled to Branch 121 of the Regional Trial Court
[1]
of Caloocan City.

[2]
In his Complaint, dated 16 June 2002, respondent alleged that on 24 September 1986, Victoria
Garcia Vda. de Crisostomo, mother of petitioner Jose G. Crisostomo, sold to him, by way of a
[3]
Deed of Absolute Sale, the property, described in the aforesaid TCT including the
improvements and rights thereon, particularly described as TAG No. 84-205-1097 (Urban Bliss
Level I [ZIP] located at 163 Libis Talisay, Caloocan City). In the Deed of Sale, petitioner Jose
Crisostomo and his sister Cristina Crisostomo signed as witnesses in the execution of the
instrument. Since they were distant relatives, respondent allowed Victoria and her children,
petitioner Jose and Cristina, to stay in the subject property as lessees under a Contract of
[4]
Lease. By virtue of the said deed of sale, respondent effected the transfer of the tax
declaration covering the property, under his name from the City Assessors Office of Caloocan
City.

However, before the transfer of title to respondent could be completed, petitioners-spouses Jose
and Marlene Crisostomo were able to secure a loan from the National Home Mortgage Finance
Corporation using the subject property as security through bad faith and machinations. Worse,
petitioners were able to transfer the subject property under their names, obtaining TCT No.
273165, from the Registry of Deeds of Caloocan City, without the knowledge and consent of the
respondent.

[5]
Instead of an Answer, petitioners filed an Urgent Motion to Dismiss Action, alleging that since
respondents cause of action is based on an alleged deed of sale executed on 24 September
1986, the cause of action of the respondent to enforce and to implement the instrument arose on
[6]
24 September 1986 and pursuant to Article 1144 of the Civil Code, the action must be brought
within 10 years from the time the right of action accrues. Thus, from 24 September 1986,
respondent had only up to 24 September 1996 within which to file the action. Since the complaint
was filed only on 20 June 2002, or after the lapse of more than 16 years, the cause of action is
clearly barred by prescription.
[7]
Respondent, in his Comment to the Motion to Dismiss, countered that the cause of action has
not yet prescribed. He contends that Article 1144 of the Civil Code does not apply to the case
because the complaint is for cancellation of title registered in the names of the petitioners and for
reconveyance. Respondent further points out that he did not file an action for specific
performance based on the deed of sale. The complaint, he said, is for reconveyance based on an
implied or constructive trust which expires in 10 years counted from the date the adverse title to
the property is asserted by the possessor.
[8] [9]
After the parties filed their respective reply and rejoinder, the motion was deemed
submitted for resolution.

[10]
Resolving the motion, the trial court issued an Order dated 12 August 2003, dismissing the
same for lack of merit, in this wise:

It appears from the pleadings submitted by the parties that the mother of defendant Jose Crisostomo
had sold the property subject matter of this case to the plaintiff as evidenced by a Deed of Absolute
Sale. However, before the property could have been registered with the Register of Deeds and a
transfer certificate of title could have been issued, the defendants had obtained a loan from the
National Home Mortgage Finance Corporation using the subject property as collateral. The defendants
were able to transfer the subject property in their names now covered by Transfer Certificate of Title
No. 273165 before the Register of Deeds of Caloocan City.

By way of an opposition, the plaintiff alleged that the action is for the cancellation of title based on
fraud which was discovered upon the registration of the property in 1993. The case was filed on June
20, 2003,(sic) hence, the action has not yet prescribed.

While it is true that in action based on a written contract prescribes in 10 years, the same however
does not find application in the case at bar. The plaintiff is trying to cancel the transfer certificate of
title issued in favor of the private defendants based on the alleged fraud which was discovered in 1993.

WHEREFORE, in view of the foregoing, the instant motion is hereby DENIED for utter lack of merit.

The defendants are directed to file their Answer within ten (10) days from receipt of a copy of this
[11]
order.

[12] [13]
Petitioners filed a Motion for Reconsideration, dated 11 September 2003 which the
[14]
respondent opposed. The trial court denied the Motion for Reconsideration in an Order dated
[15] [16]
21 October 2003. Undaunted, petitioners filed a Petition for Certiorari before the Court of
[17]
Appeals.
[18]
In a resolution dated 20 February 2004, the Court of Appeals resolved to dismiss the petition
outright stating that the defense of prescription being a question of fact, the same is not proper
[19]
in a petition for certiorari.
 [20]
Petitioners filed a Motion for Reconsideration dated 22 March 2004 which was denied in a
[21]
resolution dated 06 August 2004.

Hence, this petition grounded on the following:

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE ISSUE OF PRESCRIPTION
INVOLVES A QUESTION OF FACT.

II.

EVEN ASSUMING ARGUENDO THAT SAID ISSUE OF PRESCRIPTION INVOLVES A QUESTION OF FACT,
WHETHER OR NOT THE COURT OF APPEALS ERRED BY REFUSING TO RESOLVE THE MERITS OF THE SAID
PETITION BELOW.

III.

[22]
WHETHER OR NOT THE ACTION FILED BY THE RESPONDENT HAD ALREADY PRESCRIBED.

On the issue of whether the defense of prescription is a question of fact or law, the distinction is
settled that there is a question of fact when the doubt or difference arises as to the truth or
falsehood of the alleged facts. On the other hand, a question of law exists when there is a doubt
[23]
or controversy as to what the law is on a certain state of facts. For a question to be one of
law, the same must not involve an examination of the probative value of the evidence presented
[24]
by the litigants or any of them. The resolution of the issue must rest solely on what the law
provides on the given set of circumstances. Once it is clear that the issue invites a review of the
[25]
evidence presented, the question posed is one of fact.
The test of whether a question is one of law or of fact is not the appellation given to such
question by the party raising the same; rather, it is whether the appellate court can determine
the issue raised without reviewing or evaluating the evidence, in which case, it is a question of
[26]
law; otherwise it is a question of fact.
[27]
In the case of Santos, et al. v. Aranzanso, this Court has held that the question of prescription
of the action involves the ascertainment of factual matters such as the date when the period to
[28]
bring the action commenced to run. I n Lim v. Chan, this Court has again decreed that
prescription is a factual matter when it held that without conducting trial on the merits, the trial
court cannot peremptorily find the existence of estoppel, laches, fraud or prescription of actions
as these matters require presentation of evidence and determination of facts.
At first glance, applying these jurisprudence as bases, it may seem that the Court of Appeals
acted correctly in denying the petition. However, while we agree with the Court of Appeals that
the issue of prescription is a factual matter, we deem it erroneous on its part to have dismissed
the petition on this ground. The Court of Appeals could have squarely ruled if the trial court
committed grave abuse of discretion in denying the motion to dismiss the Complaint filed by the
petitioners considering that the facts from which the issue of prescription can be adduced are
available to the appellate court, they being extant from the records.

The records disclose that the date of registration of the subject property in the name of the
petitioners was 16 November 1993 while the Deed of Sale executed in favor of the respondent
was dated 24 September 1986. The complaint for the reconveyance and cancellation of TCT was
filed by the respondent on 20 June 2002.

Moreover, a motion to dismiss based on prescription hypothetically admits the truth of the facts
[29]
alleged in the complaint. Such hypothetical admission is limited to the facts alleged in the
complaint which relate to, and are necessary for, the resolution of the grounds stated in the
motion to dismiss as preliminary matters involving substantive or procedural laws, but not to the
other facts of the case. As applied herein, the hypothetical admission extends to the date of
execution of the Deed of Sale in favor of the respondent and to the date of registration of title in
favor of the petitioners.

The foregoing considered, the Court of Appeals was properly equipped with the tools to
determine if the trial court abused its discretion in ruling that respondents cause of action had
not prescribed. Nevertheless, instead of remanding this case to the Court of Appeals which is
concededly a costly endeavor in terms of the parties resources and time, we shall rule on the
[30]
issue of prescription.
Petitioners allegation that an action for the reconveyance of real property on the ground of fraud
[31]
must be filed within four years from the discovery of the fraud is without basis.

The four-year prescriptive period relied upon by the petitioners apply only if the complaint seeks
[32]
to annul a voidable contract under Article 1390 of the Civil Code. In such case, the four-year
[33]
prescriptive period under Article 1391 begins to run from the time of discovery of the
[34]
mistake, violence, intimidation, undue influence or fraud.

Generally, an action for reconveyance of real property based on fraud prescribes in four years
from the discovery of fraud; such discovery is deemed to have taken place upon the issuance of
the certificate of title over the property. Registration of real property is a constructive notice to
[35]
all persons and, thus, the four-year period shall be counted therefrom.
In the case at bar, respondents action which is for Reconveyance and Cancellation of Title is
based on an implied trust under Art. 1456 of the Civil Code since he averred in his complaint that
through fraud petitioners were able to obtain a Certificate of Title over the property. He does not
seek the annulment of a voidable contract whereby Articles 1390 and 1391 of the Civil Code
would find application such that the cause of action would prescribe in four years.

Art. 1456 of the Civil Code provides:

Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the property comes.

Thus, it was held that when a party uses fraud or concealment to obtain a certificate of title of
[36]
property, a constructive trust is created in favor of the defrauded party.

Constructive trusts are created by the construction of equity in order to satisfy the demands of
justice and prevent unjust enrichment. They arise contrary to intention against one who, by
fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought
[37]
not, in equity and good conscience, to hold.
When property is registered in anothers name, an implied or constructive trust is created by law
[38]
in favor of the true owner. The action for reconveyance of the title to the rightful owner
[39]
prescribes in 10 years from the issuance of the title.

An action for reconveyance based on implied or constructive trust prescribes in ten years from
the alleged fraudulent registration or date of issuance of the certificate of title over the
[40]
property.

It is now well-settled that the prescriptive period to recover property obtained by fraud or
mistake, giving rise to an implied trust under Art. 1456 of the Civil Code, is 10 years pursuant to
Art. 1144. This ten-year prescriptive period begins to run from the date the adverse party
repudiates the implied trust, which repudiation takes place when the adverse party registers the
[41]
land.

Clearly, the applicable prescriptive period is ten years under Art. 1144 and not four years under
[42]
Arts. 1389 and 1391.

Applying the law and jurisprudential declaration above-cited to the allegations of fact in the
complaint, it can clearly be seen that respondent has a period of 10 years from the registration of
the title within which to file the action. Since the title was registered in the name of the
petitioners on 1 6 November 1993, respondent had a period of 10 years from the time of the
registration within which to file the complaint. Since the complaint was filed on 20 June 2002, the
action clearly has not prescribed and was timely-filed.

WHEREFORE, premises considered, the instant petition is:

(1) GRANTED, with respect to the petitioners prayer that the Court of Appeals should
have resolved the petition on the merits.

(2) DENIED, with respect to the prayer for the dismissal of Civil Case No. C-20128
before the Regional Trial Court of Caloocan City, Branch 121.

The case is ordered remanded to the trial court which is directed to continue with the hearing
and proceed with Civil Case No. C-20128 with deliberate dispatch. No costs.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson
CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice Associate Justice

ROMEO J. CALLEJO, SR.

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in
the above Decision were reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Chief Justice

On the second issue, petitioners fervently insist that the Court of Appeals should have settled the
issue of prescription.

We agree.

Under certain situations, recourse to certiorari or mandamus is considered appropriate, that is,
(a) when the trial court issued the order without or in excess of jurisdiction; (b) where there is
patent grave abuse of discretion by the trial court; or, (c) appeal would not promptly relieve a
defendant from the injurious effects of the patently mistaken order maintaining the plaintiffs
baseless action and compelling the defendant needlessly to go through a protracted trial and
[43]
clogging the court dockets by another futile case.

Indeed, a writ of Certiorari is not intended to correct every controversial interlocutory ruling; it is
resorted to only to correct a grave abuse of discretion or a whimsical exercise of judgment
equivalent to lack or excess of jurisdiction. The function of a petition for Certiorari is limited to
keeping an inferior court within the bounds of its jurisdiction and to relieve persons from
arbitrary acts which courts or judges have no power or authority in law to perform. Certiorari is
[44]
not designed to correct erroneous findings and conclusions made by the court. Even if, in the
greater interest of substantial justice, certiorari may be availed of, it must be shown that the trial
court acted with grave abuse of discretion amounting to lack or excess of jurisdiction, that is, that
the trial court exercised its powers in an arbitrary or despotic manner by reason of passion or
personal hostilities, so patent and gross as to amount to an evasion or virtual refusal to perform
the duty enjoined or to act in contemplation of law.

Finally, on the third issue of whether or not prescription has set in, the resolution of this issue
requires that we closely scrutinize the facts of the case, relating to the sufficiency of the
evidence. Having established that the issue is factual and that it entails an examination of the
records, the same is not proper for resolution in the present petition. Petitioners have not shown
that a departure from this rule is warranted under the circumstances. Be that as it may, to put
the issue to rest, we deem it necessary to determine the presence or absence of prescription. It
must be noted that the title to the property was registered in the name of the petitioners on 16
[45]
November 1993. The rule is that it is the act of registration that operates to convey
registered land or affect title- registration in a public registry creates constructive notice to the
[46]
whole world. The Complaint was filed on 20 June 2002.

[1]
Presided by Judge Adoracion G. Angeles.
[2]
Annex J, rollo, p. 64.
[3]
Annex K, Id. at 71.
[4]
Annex L, Id. at 72.
[5]
Annex N, Id. at 74.
[6]
CIVIL CODE, Art. 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.
[7]
Annex O, rollo, p. 79.
[8]
Annex P, Id. at 82.
[9]
Annex Q, Id. at 85.
[10]
Id. at 87-88.
[11]
Id. at 87-88.
[12]
Id. at 89.
[13]
Records, p. 103.
[14]
Annex T, rollo, p. 95.
[15]
Records, p. 117.
[16]
Rollo, p. 27.
[17]
Docketed as CA-G.R. SP No. 813117.
[18]
Penned by Associate Justice Hakim S. Abdulwahid with Associate Justices Delilah Vidallon-Magtolis and Jose L. Sabio, Jr., concurring.
[19]
Annex C, rollo, pp. 100-101.
[20]
Annex D, Id. at 103.
[21]
Annex A, Id. at 27.
[22]
Rollo, p. 150.
[23]
Olave v. Mistas, G.R. No. 155193, 26 November 2004, 444 SCRA 479, 490, citing Skippers Pacific, Inc. v. Mira, G.R. No. 144314, 21
November 2002, 392 SCRA 371, 383; Western Shipyard Services, Inc. v. Court of Appeals, G.R. No. 110340, 28 May 2001, 358 SCRA
257, 264.
[24]
Ramos v. Pepsi Cola Bottling Co. of the Phils., 125 Phil. 701, 705 (1967).
[25]
Microsoft Corporation and Lotus Development Corp. v. Maxicorp, Inc., G.R. No. 140946, 13 September 2004, 438 SCRA 224, 231, citing
Cheesman v. Intermediate Appellate Court, G.R. No. 74833, 21 January 1991, 193 SCRA 93, 101; Cucueco v. Court of Appeals, G.R. No.
139278, 25 October 2004, 441 SCRA 290, 299.
[26]
Saludo, Jr. v. Court of Appeals, G.R. No. 95536, 23 March 1992, 207 SCRA 498, 506; Cucueco v. Court of Appeals, supra.
[27]
201 Phil. 481, 484 (1982).
[28]
G.R. No. 127227, 28 February 2001, 353 SCRA 55, 60.
[29]
Halimao v. Villanueva, 323 Phil. 1, 10 (1996); see also I REMEDIAL LAW COMPENDIUM, Florenz D. Regalado, p. 242, (7th Ed.).
[30]
Bunao v. Social Security Sytem, G.R. No. 156652, 13 December 2005, citing Vallejo v. Court of Appeals , G.R. No. 156413, 14 April 2004,
427 SCRA 658, 669; San Luis v. Court of Appeals, 417 Phil. 598, 605 (2001).
[31]
Memorandum for the Petitioners; Rollo, p. 159.
[32]
Art. 1390. The following contracts are voidable or annullable, even though there may have been no damage to the contracting parties;
(1) Those where one of the parties is incapable of giving consent to a contract.
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification.
[33]
Art. 1391. The action for annulment shall be brought within four years.
This period shall begin: In cases of intimidation, violence or undue influence, from the time the defect of the consent ceases.
In case of mistake or fraud, from the time of the discovery of the same.
And when the action refers to contracts entered into by minors or other incapacitated persons, from the time the guardianship ceases.
[34]
Pascual v. Court of Appeals, G.R. No. 115925, 15 August 2003, 409 SCRA 105, 113.
[35]
Philippine Economic Zone Authority v. Fernandez, 411 Phil. 107, 119 (2001), cited in Government Service Insurance System v. Santiago,
G.R. No. 155206, 28 October 2003, 414 SCRA 563, 571.
[36]
Juan v. Zuiga, 114 Phil. 1163, 1167-1168 (1962), cited in Heirs of Clemente Ermac v. Heirs of Vicente Ermac, 451 Phil. 368, 378-379
(2003).
[37]
Cuenco v. Cuenco Vda. De Manguerra, G.R. No. 149844, 13 October 2004, 440 SCRA 252, 262-263, citing Sps. Rosario v. Court of
Appeals, 369 Phil. 729, 750 (1999).
[38]
Austria-Magat v. Court of Appeals, 426 Phil. 263, 278 (2002).
[39]
Austria-Magat v. Court of Appeals, supra, p. 279.
[40]
Pascual v. Court of Appeals, supra note 34, pp. 114-115.
[41]
Sps. Alfredo v. Sps. Borras, G.R. No. 144225, 17 June 2003, 404 SCRA 145, 165; Vda. De Delgado v. Court of Appeals , 416 Phil. 263, 274
(2001); Villanueva-Mijares v. Court of Appeals, 386 Phil. 555, 566 (2000).
[42]
Pascual v. Court of Appeals, supra note 34, p. 113.
[43]
Sui Man Hui Chan and Gonzalo Co v. Court of Appeals, G.R No. 147999, 27 February 2004, 424 SCRA 127.
[44]
Cruz, Jr. v. People, G.R. No. 110436, 27 June 1994, 233 SCRA 439, cited in Samson v. Office of the Ombudsman, G.R. No. 117741, 29
September 2004.
[45]
Annex E,p.157 Records
[46]
Gonzales v. CA GR 110335 June 18,2001 358 SCRA 598 cited in Venzon v. Juan GR 128308 April 14,2004 427 SCRA 237