Prescriptive Period for Annulment of Contract (Part 2)

Under Article 1391 of the Civil Code, an action for annulment of a contract must be brought within 4 years.

In Associated Bank vs. Spouses Justiniano S. Montano, Sr. and Ligaya Montano, et al, G.R. No. 166383, October 16, 2009, the Supreme Court ruled that under the circumstances of that case, an action for the annulment of a sale contract based on threat and intimidation allegedly committed by cronies of then President Marcos may be brought within 4 years from February 21, 1986, when President Marcos was ousted from power (see posting of November 22, 2009).  In Associated Bank, the respondents claimed that Tres Cruces Agro-Industrial Corporation was only forced to sell the properties to ICCI because of threats and intimidation allegedly employed by Marcos’ cronies upon the relatives of the Montanos while the latter were on self-exile outside the country.   The Montanos filed their complaint on September 15, 1989.

In First Philippine Holdings Corporation vs. Trans Middle East (Phils.) Equities Inc., G.R. No. 179505. December 4, 2009, First Philippine Holdings Corporation (FPHC) argued that the prescriptive period for the annulment of the sale of its PCI Bank shares to Trans Middle East (Phils.) Equities Inc. (TMEE) should be reckoned from February 24, 1986, the date when President Marcos left the country.   Here, FPHC sold its PCI Bank shares to TMEE on May 24, 1984.   FPHC filed its complaint to annul the sale on December 28, 1988 (which is more than 4 years after the date of the sale but within 4 years from the date President Marcos left the country).

The Supreme Court ruled that FPHC’s complaint was filed beyond the 4-year prescriptive period provided in Article 1391 of the Civil Code. Why is the result different from Associated Bank?

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