THIRD DIVISION

[G.R. No. 108991. March 20, 2001.]

WILLIAM ALAIN MIAILHE , petitioner, vs . COURT OF APPEALS and

REPUBLIC OF THE PHILIPPINES , respondents.

DECISION

PANGANIBAN , J : p

Actions for the annulment of contracts prescribe in four years. If the ground for
annulment is vitiation of consent by intimidation, the four-year period starts from the time
such defect ceases. The running of this prescriptive period cannot be interrupted by an
extrajudicial demand made by the party whose consent was vitiated. If the facts
demonstrating the lapse of the prescriptive period are apparent from the records, the
complaint should be dismissed.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the February 12, 1993 Decision 1 of the Court of Appeals (CA) in CA-GR SP No.
29327. The dispositive part of the assailed Decision reads: —
"WHEREFORE, the Petition for Certiorari is hereby GRANTED. The Order
dated September 11, 1992 of the Regional Trial Court of Manila, Branch II in Civil
Case No. 90-52519 is ANNULLED and SET ASIDE and a new one is entered
dismissing the complaint on the ground of prescription.
SO ORDERED." 2

The Facts
The undisputed facts are summarized by the appellate court as follows:
"On March 23, 1990, [Petitioner] William Alain Miailhe, on his own behalf
and on behalf of Victoria Desbarats-Miailhe, Monique Miailhe-Sichere and Elaine
Miailhe-Lencquesaing led a Complaint for Annulment of Sale, Reconveyance
and Damages against [Respondent] Republic of the Philippines and defendant
Development Bank of the Philippines before the [trial] court. It was alleged, to wit:

xxx xxx xxx

4. That plaintiffs were the former registered owners of three

parcels of land located at J.P. Laurel St., San Miguel, Manila with an
aggregate area of 5,574.30 square meters, and a one (1) storey building
erected thereon, formerly covered by Transfer Certi cate of Title No. 80645
of the Register of Deeds of Manila;

5. That the above-mentioned properties had been owned by and

in the possession of plaintiffs and their family for over one hundred (100)
years until August 1, 1976;
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 6. That on August 1, 1976, during the height of the martial law
regime of the late President Ferdinand Marcos, [Respondent] Republic of
the Philippines, through its armed forces, forcibly and unlawfully took
possession of the aforesaid properties from defendants;

7. That [Respondent] Republic of the Philippines, through its

armed forces, continued its lawful and forcible occupation of the premises
from August 1, 1976 to August 19, 1977 without paying rentals, despite
plaintiffs' demands therefor; TcDaSI

8. That meanwhile, the O ce of the President showed interest

in the subject properties and directed defendant DBP to acquire for the
government the subject properties from plaintiff;
9. That on or about August 19, 1977, through threats and
intimidation employed by defendants, plaintiffs, under duress, were
coerced into selling the subject properties to defendant DBP for the grossly
low price of P2,376,805.00 or about P400.00 per square meter;

10. That defendant DBP, in turn, sold the subject properties to

[Respondent] Republic of the Philippines, through the O ce of the
President, in 1982;

11. That the only factor which caused plaintiffs to sell their
properties to defendant DBP was the threats and intimidation employed
upon them by defendants;

12. That after the late President Marcos left the country on
February 24, [sic] 1986 after the EDSA revolution, plaintiffs made repeated
extrajudicial demands upon defendants for [the] return and reconveyance
of subject properties to them, the last being the demand letters dated 24
October 1989, copies of which are attached and made integral parts hereof
as Annexes 'A' and 'A-1';

13. That despite demands, defendants unjusti ably failed and

refused, and still unjusti ably fail and refuse, to return and reconvey the
subject properties to plaintiff;

xxx xxx xxx

(par. 4-13 of the Complaint, pp. 28-29, Rollo).

On May 25, 1990, [respondent] led its Answer denying the substantial
facts alleged in the complaint and raising, as special and a rmative defenses,
that there was no forcible take-over of the subject properties and that the amount
paid to private respondents was fair and reasonable. Defendant DBP also led its
Answer raising as Special and A rmative Defense that [petitioner's] action had
already prescribed.

On August 3, 1990, the [trial] court issued an Order setting the pre-trial on
September 20, 1990. Petitioner and private respondents led their respective pre-
trial briefs.
On March 5, 1992, [respondent] led a Motion to Dismiss the complaint on
the ground that the action ha[d] prescribed pursuant to Article (1)391 in relation to
Article (1)390 of the Civil Code. Defendant DBP likewise led a Motion for
Preliminary Hearing of the A rmative Defense raising the same ground of
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 prescription as contained in the [respondent's] Motion to Dismiss.

On September 11, 1992, the [trial] court issued an Order, the dispositive
portion of which reads, as follows:

'WHEREFORE, the motion for a preliminary hearing is hereby denied

and the resolution of the motion to dismiss is deferred until trial . . .' (pp.
23-26, rollo)." 3

Respondent herein thus filed a Petition for Certiorari with the appellate court.
Ruling of the Court of Appeals
The CA ruled that petitioner's action had prescribed. A suit to annul a voidable
contract may be led within four (4) years from the time the defect ceases. As alleged in
paragraph 12 of the Complaint, there is a clear indication that the alleged threat and
intimidation employed against petitioner ceased when then President Ferdinand E. Marcos
left the country on February 24, 1986. From February 24, 1986 to March 23, 1990, when
the Complaint for Annulment of Sale was led, more than four (4) years had elapsed. The
CA also ruled that Article 1155 of the Civil Code, according to which a written extrajudicial
demand by the creditors would interrupt prescription, referred only to a creditor-debtor
relationship, which is not the case here.
Hence, this Petition. 4
The Issues
These are the issues presented before us:
"Whether the Court of Appeals committed gross reversible error in nding
that the trial court acted with grave abuse of discretion tantamount to lack of
jurisdiction.

"Whether the Court of Appeals committed gross reversible error in setting

aside the trial court's order of 11 September 1992 and in finding that:
i. petitioner's action had prescribed; and,

ii. petitioner's extrajudicial demands did not interrupt

prescription." 5

In the main, the Court will determine whether the action for the annulment of the
Contract of Sale has prescribed.
The Court's Ruling
The Petition has no merit.
Main Issue:
Prescription
Section 3, Rule 16 of the Rules of Court which was in effect at the time, expressly
allowed the trial court to "defer the hearing and determination of the motion [to dismiss]
until the trial if the ground alleged therein does not appear to be indubitable." Under the
1997 Rules of Civil Procedure, the rule now reads as follows:
"SECTION 2. Hearing of motion. — At the hearing of the motion, the
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 parties shall submit their arguments on the questions of law and their evidence
on the questions of fact involved except those not available at that time. Should
the case go to trial, the evidence presented during the hearing shall automatically
be part of the evidence of the party presenting the same.

"SECTION 3. Resolution of motion. — After the hearing, the court may

dismiss the action or claim, deny the motion, or order the amendment of the
pleading.
"The court shall not defer the resolution of the motion for the reason that
the ground relied upon is not indubitable.

"In every case, the resolution shall state clearly and distinctly the reasons
therefor. (3a)"

In the present case, the trial court deferred until trial the resolution of the Motion to
Dismiss, because it found that the Complaint did not show on its face that the action had
already prescribed. It deemed it better to allow the parties to present their evidence in a
full-blown trial.
We disagree. The CA correctly set aside the Order of the trial court. In Gicano v.
Gegato, 6 this Court held that a complaint may be dismissed when the facts showing the
lapse of the prescriptive period are apparent from the records. In its words:
". . . We have ruled that trial courts have authority and discretion to dismiss
an action on the ground of prescription when the parties' pleadings or other facts
on record show it to be indeed time-barred; . . . and it may do so on the basis of a
motion to dismiss, or an answer which sets up such ground as an a rmative
defense; or even if the ground is alleged after judgment on the merits, as in a
motion for reconsideration; or even if the defense has not been asserted at all, as
where no statement thereof is found in the pleadings, or where a defendant has
been declared in default. What is essential only, to repeat, is that the facts
demonstrating the lapse of the prescriptive period, be otherwise su ciently and
satisfactorily apparent on the record; either in the averments of the plaintiff's
complaint, or otherwise established by the evidence."

The records in this case indubitably show the lapse of the prescriptive period, thus
warranting the immediate dismissal of the Complaint.
The suit before the trial court was an action for the annulment of the Contract of
Sale on the alleged ground of vitiation of consent by intimidation. The reconveyance of the
three parcels of land, which the petitioner half-heartedly espouses as the real nature of the
action, can prosper only if and when the Contract of Sale covering the subject lots is
annulled. Thus, the reckoning period for prescription would be that pertaining to an action
for the annulment of contract; that is, four years from the time the defect in the consent
ceases. 7
A perusal of the Complaint shows that the threat and intimidation ceased after then
President Marcos left the country on February 24, 1986. In fact, it was only then that
petitioner was allegedly able to muster the courage to make extrajudicial demands on the
Republic of the Philippines. Paragraph 12 of the Complaint states:
"12. That after the late president Marcos left the country on February
24, 1986 after the EDSA revolution, plaintiffs made repeated extrajudicial
demands upon defendants for [the] return and reconveyance of subject properties
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 to them, the last being the demand letters dated 24 October 1989, copies of which
are attached and made integral parts hereof as Annexes 'A' and 'A-1';" 8

The foregoing was reiterated in the following statements in petitioner's Pretrial

Brief: 9
". . . During the height of the martial law era, the late President Ferdinand E.
Marcos, through his armed forces, forcibly and unlawfully took possession of the
property and after a year, directed the defendant Development Bank of the
Philippines ("DBP") to buy the same from the plaintiffs. Plaintiffs were forced to
sell the property for the measly sum of P2,376,805.00, which [translated] to about
P400.00 per square meter. The property was later sold by defendant DBP to the
defendant Republic of the Philippines ["Republic"], acting through the O ce of the
President. Plaintiffs pray the Honorable Court to declare their sale null and void
and to order reconveyance of the property."

Moreover, courts were functioning after Marcos left the country. There was no
hiatus in the judicial system. This is manifest in then Acting Chief Justice Claudio
Teehankee's Circular No. 2, which is reproduced hereunder:
"TO: ALL JUSTICES OF THE INTERMEDIATE APPELLATE COURT AND
SANDIGANBAYAN; AND ALL JUDGES OF THE COURT OF TAX APPEALS,
REGIONAL TRIAL COURTS, METROPOLITAN TRIAL COURTS IN CITIES,
MUNICIPAL TRIAL COURTS, MUNICIPAL CIRCUIT TRIAL COURTS AND
SHARI'A COURTS
"Reports have been received that some justices and judges have ceased or
suspended performing their duties pending action on the courtesy resignations
submitted by them in compliance with the call of the President of the Philippines.
"Courts are expected to continue discharging their judicial functions
without interruption and delay in order to ensure the speedy disposition of their
pending cases. You are, therefore, directed to continue with your regular sessions
and the hearing and adjudication of cases and the proper discharge of your
functions, until further notice from this court.

"Strict compliance thereof is hereby enjoined.

(Sgd) CLAUDIO TEEHANKEE
Acting Chief Justice"

The foregoing clearly shows that the alleged threat and intimidation, which vitiated
petitioner's consent, ceased when Marcos left the country on February 24, 1986. Since an
action for the annulment of contracts must be led within four years from the time the
cause of vitiation ceases, the suit before the trial court should have been led anytime on
or before February 24, 1990. In this case, petitioner did so only on March 23, 1990. Clearly,
his action had prescribed by then.
Interruption of Prescription
Petitioner asserts that the extrajudicial demands pleaded in paragraph 12 of the
Complaint legally interrupted prescription in accordance with Article 1155 of the Civil
Code, which states:
"ARTICLE 1155. The prescription of actions is interrupted when they
are led before the court, when there is extrajudicial demand by the creditors, and
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 when there is any written acknowledgment of the debt by the debtor."

In other words, petitioner claims that because he is covered by the term "creditor,"
the above-quoted provision is applicable to him.
We are not persuaded. Petitioner himself avers that "the use of the terms 'creditor'
and/or 'debtor' in Article 1155 of the Civil Code must relate to the general de nition of
obligations." 1 0 He then asserts that "an obligation is a juridical relation whereby a person
(called the creditor) may demand from another (called the debtor) the observance of a
determinate conduct, and in case of breach, may obtain satisfaction from the assets of the
latter." 1 1 He also de nes "credit" as the right to demand the object of the obligation. From
his statements, it is clear that for there to be a creditor and a debtor to speak of, an
obligation must first exist. AHcDEI

In the present case, there is as yet no obligation in existence. Respondent has no

obligation to reconvey the subject lots because of the existing Contract of Sale. Although
allegedly voidable, it is binding unless annulled by a proper action in court. 1 2 Not being a
determinate conduct that can be extrajudicially demanded, it cannot be considered as an
obligation either. Since Article 1390 of the Civil Code states that voidable "contracts are
binding, unless they are annulled by a proper action in court," it is clear that the defendants
were not obligated to accede to any extrajudicial demand to annul the Contract of Sale. 1 3
In the absence of an existing obligation, petitioner cannot be considered a creditor,
and Article 1155 of the Civil Code cannot be applied to his action. Thus, any extrajudicial
demand he made did not, or will not, interrupt the prescription of his action for the
annulment of the Contract of Sale.
WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of
Appeals AFFIRMED. Costs against petitioner.
SO ORDERED.
Melo, Gonzaga-Reyes and Sandoval-Gutierrez, JJ., concur.
Vitug, J., took no part; party's relative a former client.

Footnotes

1. Penned by Justice Regina G. Ordoñez-Benitez, with the concurrence of Justices Arturo B.

Buena (Division chairman and now a member of this Court) and Eduardo G.
Montenegro.
2. CA Decision, p. 7; rollo, p. 41.

3. Rollo, pp. 35-38.

4. To eradicate its backlog of old cases, the Court on February 27, 2001 resolved to
redistribute long-pending cases to justices who had no backlog, and who were thus
tasked to prioritize them. Consequently, this case was raffled and assigned to the
undersigned ponente for study and report on the same date.
5. Petitioner's Memorandum, pp. 8-9; rollo, pp. 202-203.
6. 157 SCRA 140, 145-146, January 20, 1988, per Narvasa, J . See also Bergado v. CA, 173
SCRA 497, May 19, 1989; Garcia v. Mathis, 100 SCRA 250, September 30, 1980;
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 Philippine National Bank v. Pacific Commission House, 27 SCRA 766, March 28, 1969.
7. Article 1391 of the Civil Code reads:
"Art. 1391. The action for annulment shall be brought within four years.
The period shall begin:
In cases of intimidation, violence or undue influence, from the time the defect of the
consent ceases.
xxx xxx xxx."
See also MWSS v. Lopez, 297 SCRA 287, October 7, 1998; Rodriguez v. Rodriguez, 20
SCRA 908, July 31, 1967.
8. Complaint, p. 3; rollo, p. 49.

9. Rollo, p. 240.
10. Petitioner's Memorandum, p. 19; rollo, p. 213.
11. Ibid., p. 20; rollo, p. 214.
12. See Agra v. PNB, 309 SCRA 509, June 29, 1999; Rio Grande Rubber Estate Co. Inc. v.
Board of Liquidators, 104 Phil. 863, November 28, 1958.
13. See Philippine National Bank v. Osete, 24 SCRA 63, July 18, 1968.

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