Carantes vs CA

Carantes vs CA (1977) Petitioner: Maximino Carantes (substituted by his wife Engracia) Respondents: CA, Bilad Carantes, et al. Nature: Action for reconveyance GIST:The heirs of the land of Mateo Carantes executed a deed of “Assignment of Right to Inheritance” in favor of their brother, Maximino. Later on, they wanted to annul the Deed on the ground that they executed it only because Maximino made them believe it would make a transaction with the Government (who wants to buy part of the land for an airport) easier. When the case reached the SC, Maximino‟s wife who substituted him says that the other heirs‟action is not for annulment but for reformation of the deed. SC says she cannot raise this for the first time. Deed is voidable, but heirs‟ action has prescribed. FACTS:

1. Mateo Carantes was the owner of Lot No 44 in Laoakan, Baguio City. He died in 1913. 2. 1930 – the Government commenced the construction of the Laokan Airport. A portion of Lot No 44 was needed for the airstrip, so it was subdivided into Lots Nos. 44-A to 44-E. The government expropriated Lot No. 44-A. 3. 1933 – Special Proceedings for the settlement of the estate of Mateo Carantes were filed. One of his sons, Maximino Carantes, was appointed judicial administrator. 4. June 20, 1939 – Maximino filed a project of partition where he listed the heirs (himself, his brothers and sisters) who will inherit his father‟s estate. 5. Oct. 23, 1939 – a deed of “Assignment of Right to Inheritance” was executed by the other children of Mateo Carantes 6. Assigned to Maximino Carantes their rights to inheritance in Lot No 44 7. Τhe stated monetary condition was P1.00

8. Contains a provision saying that the said lots rightly and exclusively belong to Maximino Carantes 9. On the same date, Maximino sold to the Government Lots Nos 44-B and 44-C. 10. Mar 16, 1940 – Maximino registered the deed of “Assignment of Right to Inheritance” 11. Feb 21, 1947 – the TCT covering Lots Nos 44-A to 44-C was issued in the name of the Government, and the TCT covering the remaining lots was issued in the name of Maximo. 12. Sept. 4, 1958 – a complaint was filed by the three other children of Mateo Carantes with Maximo as defendant 13. Allegations of the complaint: 14. They executed the deed of “Assignment of Right 15. to Inheritance” only because Maximino made them believe that the deed embodied the understanding among the parties that it merely authorized Maximino to convey portions of Lot No 44 to the Government in their behalf to minimize expenses and facilitate the

transaction. 16. It was only on Feb. 18, 1958 when they found out that the deed purported to assign in favor of Maximino their rights to inheritance. 17. The heirs want the “Assignment of Right of Inheritance” to be declared null and void. 18. RTC: the heirs‟ right of action has prescribed. Action based on fraud prescribes in 4 years. The fraud allegedly committed by Maximino is deemed to have been discovered on Mar 16, 1940 when the deed of assignment was registered. The heirs filed the action only in 1958. 19. CA reversed RTC. Relied on NCC 1409. “Assignment of Right to Inheritance” is void ab initio because there was no consent and the P1.00 consideration is too small to be a consideration. (at this point, Maximino‟s wife Engracia has substituted Maximino) In the brief before the SC, Engracia argues that the heirs‟ action is NOT for annulment of the deed of Assignment but for the reformation thereof. This action has allegedly prescribed. Issues:

1. WON the heirs action, being one for reformation of the deed, prescribed? 2. WON the deed is void ab initio? 3. WON the deed is voidable?

Held: 1. Engracia cannot raise this issue for the first time when she did not raise it in his answer in the RTC. 2. No. 3. Yes, but the action has prescribed. Ratio: Re: action for reformation • Maximino did not raise the defense of prescription of the action for reformation in his answer to the heirs‟ complaint in the RTC, so Engracia cannot raise this anymore • The trial proceeded on the theory that the action sought the declaration of the nullity of the deed of Assignment • Settled rule: defenses not pleaded in the answer may not be raised for the first time on appeal Re: Void ab initio • SC cannot agree with CA, relying on NCC 1409, that the deed is void ab initio because there is no consent and consideration  • The consideration was not absent. P1.00 is a valid consideration and it appears so in the document  • The document also recites that Mateo Carantes, when he was still alive, had expressed to his heirs that Lot No 44 belonged exclusively to Maximino Carrantes. This acknowledgement 

by the heirs constitutes valuable consideration for the contract.  

***Re: Voidable • NCC 1390: a contract where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud is voidable • NCC 1359 par 2: if mistake, fraud, inequitable conduct or accident has prevented a meeting of the minds of parties, the proper remedy is not reformation of the instrument but annulment of the contract • Fraud or deceit does not render a contract void ab initio, but merely voidable. An action to annul a contract on the ground of fraud prescribes in 4 years • In this case, the fraud must be deemed to have been discovered on March 16, 1940, when the Deed was registered in the Register of Deeds • The registration of an instrument constitutes a constructive notice to the whole world, and discovery of fraud is deemed to have taken place at the time of registration  Thus, since the heirs filed the present action only in 1958, the action has prescribed. CA Judgment set aside.