MAXIMINO CARANTES (SUBSTITUTED BY ENGRACIA MABANTA ISSUE:

CARANTES), PETITIONER, VS. COURT OF APPEALS, BILAD CARANTES,

 Mateo Carantes is the owner of Lot 44 in Baguio by virtue of Free Patent. Mateo  Article 1409 (2) of the new Civil Code relied upon by the respondent court
died and was survived by his widow and 6 children. Lot 44 was divided to 5 parts provides that contracts "which are absolutely simulated or fictitious" are inexistent
and the government expropriated lot A due to construction of the airport. While the and void from the beginning.  The basic characteristic of simulation is the fact that
negotiations were ongoing for lot B and C (widening of the airport), the estate was the apparent contract is not really desired or intended to produce legal effects or in
settled in court where Maximo was appointed as the administrator, and the only any way alter the juridical situation of the parties. [4]
properties listed in the estate is lot 44.
 A deed of assignment was executed by 4 of Mateo’s children, assigning their rights
 The respondents' action may not be considered as one to declare the inexistence of
to inheritance in Lot 44. The monetary consideration was P1.00. On the same day, a contract for lack of consideration.  It is total absence of cause or consideration
Maximo sold Lot B and C to the government and divided the proceeds among that renders a contract absolutely void and inexistent. [5] In the case at bar con-
himself and the siblings. Subsequently, CFI cancelled the OCT and TCT was sideration was not absent.  The sum of P1.00 appears in the document as one of the
issued in joint names of the 5 children of Mateo and heirs of Apung (one of the considerations for the assignment of inheritance.  In addition - and this of great
siblings), as co-owners pro indiviso. legal import - the document recites that the decedent Mateo Carantes had, during
his lifetime, expressed to the signatories to the contract that the property subject-
 Subsequently, Maximo registered the Deed of Assignment. The TCT was
matter thereof rightly and exclusively belonged to the petitioner Maximino
cancelled and a new TCT was issued in the name of Maximo. Also, Maximo, as
Carantes.  This acknowledgment by the signatories definitely constitutes valuable
exclusive owner, executed a formal deed of sale in favor of the government over
consideration for the contract.
Lots B and C. TCT was again cancelled and TCT of Lots A, B, and C was issued
in the name of the government, while Lots D and E to Maximo.
 3 of Maximo’s siblings and heirs of Apung filed a complaint paring that the deed On fraud:
of assignment be declared null and void, alleging that they executed the deed of
assignment only because they were made to believe by Maximo that the deed  Article 1390 of the new Civil Code provides that a contract "where the consent is
embodied that it merely authorized Maximo to convey portions of the lot in their
vitiated by mistake, violence, intimidation, undue influence or fraud," is voidable
behalf to minimize the expenses and facilitate the transaction. It was only on 1958
or annullable.  Even article 1359, which deals on reformation of instruments,
when they secured a copy of the deed. They also prayed that Lot D and E be
provides in its paragraph 2 that "If mistake, fraud, inequitable conduct, or accident
partitioned into 6 equal shares, a Deed of conveyance be executed and Maximo to
has prevented a meeting of the minds of the parties, the proper remedy is not
pay !k as attys fees and 200 as cost of suit.
reformation of the instrument but annulment of the contract." When the consent to
 Maximo filed a MTD: cause of action was barred by statute of limitation since a contract was fraudulently obtained, the contract is voidable. [6] Fraud or deceit
according to Art 1144, action based on written contract must be brought within 10 does not render a contract void ab initio, and can only be a ground for rendering
years from the time the right of action accrues (deed recorded Feb 1947; complaint the contract voidable or annullable pursuant to article 1390 of the new Civil Code
filed Sept 1958); and the complaint states no cause of action, ownership become by a proper action in court.[7]
vested by acquisitive prescription 10 years from registration. RTC denied MTD.
 RTC: In favor of Maximo. Action based on fraud prescribes in 4 years. In this  The present action being one to annul a contract on the ground of fraud, its
case, the fraud was discovered 1940 and the action was filed 1958. even assuming prescriptive period is four years from the time of the discovery of the fraud. [8]
that the land remained the common property of the plaintiffs and the defendant  The next question that must be resolved is:  from what time must fraud, assuming
Maximino Carantes notwithstanding the execution of the deed of assignment, the that there was fraud, be deemed to have been discovered in the case at bar?  From
co-ownership was completely repudiated by the said defendant by performance of February, 1958, when, according to the private respondents, and as found by the
several acts, the first of which was his execution of a deed of sale in favor of the respondent court, the private respondents actually discovered that they were
Government on October 23, 1939, hence, ownership had vested in the defendant defrauded by the petitioner Maximino Carantes when rumors spread that he was
Maximino Carantes by acquisitive prescription selling the property for half a million pesos?  Or from March 16, 1940, when, as
 CA: reversed. the deed of "Assignment of Right to Inheritance" is void ab initio admitted by the parties and found by both the trial court and the respondent court,
and inexistent on the grounds that real consent was wanting and the consideration the deed of "Assignment of Right to Inheritance" was registered by the petitioner
of P1.00 is so shocking to the conscience that there was in fact no consideration, in the Office of the Register of Deeds?
hence, the action for the declaration of the contract's inexistence does not prescribe  The weight of authorities is to the effect that the registration of an instrument in the
pursuant to article 1410 of the new Civil Code. Office of the Register of Deeds constitutes constructive notice to the whole world,
and, therefore, discovery of the fraud is deemed to have taken place at the time of
 the registration.[9] In this case the deed of assignment was registered on March 16,
1940, and in fact on the same date T.C.T. No. 2533 in the names of the heirs of
Mateo Carantes was cancelled, and T.C.T. No. 2540 in the name of the petitioner
was issued in lieu thereof.  The four-year period within which the private
respondents could have filed the present action consequently commenced on
March 16, 1940; and since they filed it only on September 4, 1958, it follows that
the same is barred by the statute of limitations.

ACCORDINGLY, the judgment of the Court of Appeals appealed from is set aside,
and another entered dismissing the complaint in Civil Case No. 804 of the Court of First
Instance of Baguio.  No costs.