TL;DR

In Selerio v. Bancasan, the Supreme Court clarified that while actions based on written contracts prescribe in ten years, this period can be interrupted and restarted by written acknowledgments or demands. The Court ruled that Tregidio Bancasan’s action to recover property based on a Deed of Transfer was not prescribed because a Compromise Agreement and a subsequent written demand effectively interrupted the prescriptive period. This means the case will proceed to trial to determine the validity of the Deed, emphasizing that procedural defenses like prescription must be carefully considered without prejudging the merits of the substantive claims.

Time’s Not Up: Understanding Prescription and Contract Enforcement in Property Disputes

Imagine purchasing property only to be denied possession for over a decade. This was the predicament of Tregidio Bancasan, who sought to recover land based on a Deed of Transfer from Nieves Selerio. The Regional Trial Court (RTC) initially dismissed Bancasan’s complaint, arguing his action had prescribed because more than ten years had passed since Selerio was supposed to vacate the property. However, the Court of Appeals (CA) reversed this decision, and ultimately, the Supreme Court affirmed the CA, albeit with a nuanced rationale. The central legal question revolved around the principle of prescription – the time limit within which legal actions must be filed – and whether Bancasan’s claim had indeed lapsed. This case highlights the critical interplay between contractual rights, property possession, and the procedural rules governing the timely enforcement of legal claims.

The dispute originated from a Deed of Transfer and Waiver of Rights executed in 1993, where Nieves Selerio agreed to transfer property to Bancasan in exchange for P200,000. A key condition was Selerio’s family vacating the premises by April 30, 1994. Initially, the RTC sided with Selerio, characterizing Bancasan’s action as specific performance of a written contract, subject to a ten-year prescriptive period under Article 1144 of the Civil Code. The RTC calculated the prescription from April 30, 1994, and since Bancasan filed suit in 2007, deemed it time-barred. The CA disagreed, finding a perfected contract of sale and viewing Selerio’s continued possession as mere tolerance, thus prescription only started when demand to vacate was refused in 2007 – within the prescriptive period.

The Supreme Court, while agreeing with the CA’s outcome, offered a different legal analysis. Justice Caguioa, writing for the First Division, clarified fundamental contract law: a contract of sale is perfected by mere consent. The Court cited Beltran v. Spouses Cangayda, Jr., emphasizing that payment of price or delivery of property are not essential for perfection, but rather for performance.

“A contract of sale is consensual in nature, and is perfected upon the concurrence of its essential requisites…Being a consensual contract, sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance…”

However, the Supreme Court cautioned against prematurely declaring the sale valid, as Selerio raised defenses of fraud and undue influence. Crucially, the RTC dismissed the case solely on prescription, without a full trial to examine these defenses. The Court underscored that while raising prescription as an affirmative defense hypothetically admits the complaint’s allegations for that specific defense, it doesn’t negate the plaintiff’s burden to prove their case substantively. To rule definitively on the sale’s validity and ownership based solely on a prescription motion would violate Selerio’s right to due process and present her defenses.

Despite these clarifications, the Supreme Court ultimately agreed with the CA that prescription had not set in. The Court emphasized Article 1155 of the Civil Code, which states that prescription is interrupted by filing in court, written extrajudicial demand, or written acknowledgment of debt.

“Art. 1155. The prescription of actions is interrupted when they are filed before the court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor.”

Applying this, the Court found that the 10-year prescriptive period, starting May 1, 1994, was interrupted by the 1997 Compromise Agreement in a related partition case. This agreement, explicitly stating the “sale…shall proceed as agreed,” constituted a written acknowledgment of Selerio’s obligation to transfer the property and Bancasan’s obligation to pay the balance. This interruption reset the prescriptive clock. Further, Bancasan’s written demand to vacate in February 2007 fell within this new prescriptive period and itself served as another interruption, ensuring the complaint filed later that month was timely. Therefore, the Supreme Court remanded the case to the RTC for trial on the merits, directing a swift resolution of the underlying property dispute. This ruling reinforces the principle that procedural defenses must be meticulously evaluated while preserving the parties’ rights to a full and fair hearing on the substantive issues of their case.

FAQs

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Nieves Selerio and Alicia Selerio v. Tregidio B. Bancasan, G.R No. 222442, June 23, 2020