Tongoy v.

CA
G.R. No. L-45645; June 28, 1983

TOPIC: Void or Inexistent contracts

Facts:
This case is an action for reconveyance of the 2 parcels of land in Bacolod City. The 1st land is
Hacienda Pulo which title was registered in the name of Luis D. Tongoy and the 2nd is Cuaycong
property which title was transferred to Luis D. Tongoy. The properties were mortgaged in the year
1936 by said Luis D. Tongoy for a period of 15 years; that the mortgage obligations to the PNB were
fully paid on April 17, 1956; that the release of mortgage was recorded in the Registry of Deeds on
May 5, 1958; and that the case for reconveyance was filed in the trial court on June 2, 1966.

Issue:
1) W/N the rights of herein respondents over subject properties, which were the subjects of simulated
or fictitious transactions, have already prescribed.
2) W/N the 10-year prescriptive period should not be counted from the date of registration in the
name of the trustee.

Ruling:
Evidently, the deeds of transfer executed in favor of Luis Tongoy were from the very beginning
absolutely simulated or fictitious, since the same were made merely for the purpose of restructuring
the mortgage over the subject properties and thus preventing the foreclosure by the PNB. As stated
in Articles 1409 and 1410 of the New Civil Code, the within action for reconveyance instituted by the
respondents which is anchored on the said simulated deeds of transfer cannot and should not be
barred by prescription. There is no implied trust that was generated by the simulated transfers;
because being fictitious or simulated, the transfers were null and void ab initio-from the very
beginning and thus vested no rights whatsoever in favor of Luis Tongoy or his heirs.

When the mortgages were constituted, respondents Cresenciano Tongoy and Norberto Tongoy
were still minors, while respondent Amado Tongoy became of age on August 19, 1931, and Ricardo
Tongoy attained majority age on August 12, 1935. Still, considering that such transfer of the
properties in the name of Luis D. Tongoy was made in pursuance of the master plan to save them
from foreclosure, the said respondents were precluded from doing anything to assert their rights. It
was only upon failure of the herein petitioner, as administrator and/or successor-in- interest of Luis
D. Tongoy, to return the properties that the prescriptive period should begin to run. The prescriptive
period is ten year-from the date of recording on May 5, 1958 of the release of mortgage in the
Registry of Deeds.