#Art1410

[hermosa-oblicon24]

Article 1410

The action or defense for the declaration of the inexistence of a contract does not prescribe.

The action for the declaration of inexistence or the defense on such is imprescriptible. The mere lapse of time does not validate a void contract, unlike in voidable contracts, which, if not assailed within the specific period provided by law, shall remain valid.

It is not necessary to go to the court to declare the nullity of a void contract if both parties agree that it is void and henceforth, on their own volition, change it. However, to avoid instances where one party refuses to restore what he has received out of a void contract, it is better to go to the court first to avoid inconvenience or to avoid taking the law into his own hands. Taking the law into one’s hands may lead to coercion which is a criminal offense.

The right to have a contract declared void ab initio may be barred by laches although not barred by prescription. It is an application of equity, based upon the grounds of public policy which require for the peace of society, discouraging stale claims. It is however exercised on the discretion of the court, its application controlled by equitable consideration.

Related/Cited Case

Heirs of Ureta v Heirs of Ureta

FACTS: Alfonso Ureta had 14 children, including, Policronio. The children of Policronio (Heirs of Policronio), are opposed to the validity of the Extrajudicial Partition. On October 1969, in order to reduce the inheritance taxes, Alfonso executed four (4) Deeds of Sale in favor of his children including Policronio. Since the sales were only made for taxation purposes and no monetary consideration was given, Alfonso continued to own, possess and enjoy the lands and their produce. On October 11, 1972, Alfonso died and his children acted as the administrator of his father’s estate. on November 22, 1974, Policronio died. The subject land under the deed of sale was never taken possession of by Policronio nor his heirs. On April 19, 1989, Alfonso’s heirs executed a Deed of Extra-Judicial Partition, which included all the lands that were covered by the four (4) deeds of sale that were previously executed by Alfonso for taxation purposes. Conrado, Policronio’s eldest son, representing the Heirs of Policronio, signed the Deed of Extra-Judicial Partition in behalf of his co-heirs.

On July 30, 1995, the Heirs of Policronio allegedly learned about the Deed of Extra-Judicial Partition involving Alfonso’s estate when it was published in the July 19, 1995issue of the Aklan Reporter. Believing that the six parcels of land belonged to their late father, and excluded from the Deed of Extra-Judicial Partition, the Heirs of Policronio sought to amicably settle but despite earnest efforts, the Heirs of Policronio filed a Complaint for Declaration of Ownership, Recovery of Possession over the subject land.

ISSUES:  Whether or not the Deed of Extra-Judicial Partition was valid.

HELD: It is valid. The Deed of Sale entered between Alfonso and Policronio is void for being an absolutely simulated sale. No actual consideration or money was given and there was no actual intent to enter into a sale. It was merely to avoid tax purposes The Deed of Extra-Judicial Partition did not need an SPA because partition among heirs is not legally deemed a conveyance of real property resulting in change of ownership. It is not a transfer of property from one to the other, but rather, it is a confirmation or ratification of title or right of property that an heir is renouncing in favor of another heir who accepts and receives the inheritance. Partition is not an act of strict dominion which requires an SPA. In fact, as between the parties, even an oral partition by the heirs is valid if no creditors are affected. The requirement of a written memorandum under the statute of frauds does not apply to partitions effected by the heirs where no creditors are involved. In the case of Badillo v. Ferrer, the court held a deed of extrajudicial partition is not voidable by lack of parties to give consent but unenforceable as an unauthorized contract in 1403(1). However, the Deed of Extra-Judicial Partition is not unenforceable but, in fact, valid, binding, and enforceable against all the Heirs of Policronio.  because of several circumstances which shows they gave their consent to Conrado to sign on their behalf such as that Extra-Judicial Partition was signed on 1989 but the siblings only came to know about it 1995, 5 years after, and Conrado didn’t inform his siblings during such span; Conrado retained possession of land under the Extra-Judicial Partition; 1 year after the sale, the Heirs of Policronio executed an SPA to have the land under the Extra-Judicial Partition be the subject of mortgage. Such acts shows the Heirs of Policronio were aware of the said Partition and the vitiation of consent is a mere afterthought