Felix Gochan and Sons Realty Corporation v. Heirs of Raymundo Baba
REITERATIONFacts
The Antecedents: Lot No. 3537, originally titled in the name of Dorotea Inot, was a conjugal property of spouses Raymundo Baba and Dorotea Inot. After Raymundo's death in 1947, an extrajudicial settlement was executed on December 8, 1966, among Dorotea and two of their children, Victoriano and Gregorio Baba, adjudicating portions of the lot. On December 28, 1966, Dorotea, Victoriano, and Gregorio sold the entire Lot No. 3537 to Felix Gochan and Sons Realty Corporation (Gochan Realty). A Transfer Certificate of Title was issued in favor of Gochan Realty. Later, Gochan Realty entered into a joint venture agreement with Sta. Lucia Realty and Development Corporation Inc. for the development of the lot. Procedural History: On June 13, 1996, respondents, claiming to be among the children of Dorotea Inot and Raymundo Baba, filed a complaint for quieting of title and reconveyance with damages against petitioners. They alleged that the extrajudicial settlement and deed of sale were fraudulent and deprived them of their hereditary share, and that these transactions were void for lack of their consent, which they only learned about a year prior to filing the suit. The Regional Trial Court (RTC) dismissed the complaint on the ground of prescription and laches, ruling that the action, being based on fraud and implied trust, prescribes in 10 years from the issuance of the title. The Court of Appeals (CA) reversed the RTC, holding that the action, being in the nature of quieting of title and with the respondents in possession, cannot be barred by prescription and laches. Petitioners' motion for reconsideration was denied. The Petition: The case reached the Supreme Court via a petition for review on certiorari, with the sole issue being whether the respondents' complaint is dismissible on the ground of prescription and laches.
Issue(s)
Whether the respondents' complaint for quieting of title and reconveyance is dismissible on the ground of prescription. Whether the respondents' complaint is dismissible on the ground of laches.
Ruling
The petition is denied. The Decision of the Court of Appeals, which ordered the remand of the case to the Regional Trial Court for trial and judgment on the merits, is affirmed on different grounds.
Ratio Decidendi
On the issue of prescription: The Court held that the purpose of an action is determined by its allegations and prayer for relief. While the respondents described the transactions as fraudulent, their action, based on the allegations of absence of consent, in reality seeks to declare the extrajudicial settlement and deed of sale inexistent. Contracts with absent essential requisites, such as consent, are void ab initio, and actions to declare their inexistence do not prescribe, pursuant to Article 1410 of the Civil Code. Therefore, the dismissal of the complaint on the ground of prescription was erroneous. The Court emphasized that fraud in the conveyance and possession of the property are not material when the action is to declare the inexistence of a contract due to the absence of consent. On the issue of laches: The Court stated that laches is evidentiary in nature and cannot be established by mere allegations in the pleadings. Its elements must be proven positively. Therefore, the dismissal of the complaint on the ground of laches at the motion to dismiss stage was premature. The Court noted that while laches may apply even to imprescriptible actions, its determination requires a full-blown trial where parties can substantiate their claims and defenses. The petitioners are not precluded from presenting evidence of laches or estoppel during the trial.
Main Doctrine
An action to declare the inexistence of a contract due to the absence of essential requisites, such as consent, does not prescribe. Laches, being evidentiary in nature, cannot be established by mere allegations in the pleadings and cannot be resolved in a motion to dismiss.