Rigonan v. Derecho
REITERATIONFacts
The Antecedents: The subject property was originally owned by Hilarion Derecho, who died leaving eight children as co-owners by intestate succession. Five of these children sold the property to Francisco Lacambra on July 16, 1921, subject to a five-year redemption clause. The three other heirs were not parties to this sale. Two years after the redemption period expired, Dolores Derecho, one of the original co-owners, together with her husband Leandro Rigonan, purchased the land from Lacambra in 1928 and occupied it. More than five decades later, in 1980, Leandro Rigonan executed an Affidavit of Adjudication declaring himself the sole heir of Hilarion Derecho. His son, Teodoro Rigonan, obtained a new tax declaration for the property. Subsequently, Teodoro mortgaged the property and, to avoid foreclosure, sold it to Spouses Valerio and Visminda Laude in 1984, who then obtained their own tax declaration. Procedural History: In 1993, respondents, claiming to be heirs of Hilarion and pro indiviso owners, filed an action before the RTC to recover the property and annul the Affidavit of Adjudication and the Deed of Sale in favor of the Laudes, alleging fraud. The RTC declared the Affidavit and Deed of Sale void, ordered the cancellation of tax declarations, and ordered petitioners to deliver possession and ownership to respondents. The CA affirmed the RTC decision with modification, deleting the declaration of petitioners as lawful heirs and their share. The CA found the Affidavit fraudulent and the Deed of Sale void. It held that prescription was inapplicable as actions for declaration of inexistence of a contract do not prescribe. It also ruled that the repurchase by the Rigonan spouses did not end the co-ownership, that prescription did not run in favor of a co-owner who recognized co-ownership, and that Valerio Laude was not a buyer in good faith. The Petition: Petitioners seek review of the CA decision, arguing that co-ownership ended with the expiration of the redemption period, that no implied trust was created, and that the action was barred by prescription and laches. They also contend that Valerio Laude was a buyer in good faith and that the CA erred in awarding litigation expenses and attorney's fees, and in resolving the issue of heirship.
Issue(s)
Whether co-ownership subsisted among the heirs of Hilarion Derecho at the time of the purchase in 1928. Whether an implied trust was created by the repurchase of the property in 1921 and 1928. Whether the action filed before the RTC was barred by prescription and laches. Whether the action for annulment of the Deed of Sale and Affidavit of Adjudication was barred by prescription and laches. Whether Petitioner Valerio Laude was a buyer in good faith. Whether the CA erred in awarding litigation expenses and attorney's fees. Whether the CA acted with grave abuse of discretion in ruling on the issue of heirship.
Ruling
The Petition is GRANTED. The assailed July 28, 2003 Decision of the Court of Appeals is REVERSED and SET ASIDE. The Complaint before the Regional Trial Court of Danao City is DISMISSED. No costs.
Ratio Decidendi
On the issue of co-ownership: The Court ruled that the co-ownership ended when the five heirs failed to redeem the property within the stipulated five-year period, which expired on July 16, 1926. Consequently, absolute title and ownership vested in the vendee, Lacambra, by operation of law. The subsequent purchase by Dolores and Leandro Rigonan in 1928, two years after the redemption period expired, was not a redemption in the concept of a pacto de retro sale, but an entirely new and independent contract. This purchase meant Dolores reacquired legal interest in the property in her personal capacity, not as a co-owner-seller. The Court cited Adiarte v. Tumaneng and Umale v. Fernandez to support the principle that after the expiration of the redemption period, parties could enter into a new contract or extend the period, provided the extension did not exceed ten years. In this case, the repurchase was a new contract, stripping the other heirs of their co-ownership rights from that point forward. On the issue of implied trust: The Court clarified that an implied trust arose in 1921 when five co-owners sold the entire inherited property to Lacambra, defrauding the three other heirs, making Lacambra a trustee for the excluded heirs. While an implied trust could arise from fraud or mistake under Article 1456 of the Civil Code, it was not applicable to the 1928 purchase as the provision is not retroactive. The Rigonan spouses were merely stepping into the shoes of Lacambra as trustee. Despite this finding, the Court ultimately held that the action to enforce this trust was barred by prescription and laches. On the issue of prescription and laches: The Court held that both acquisitive prescription and laches barred respondents from recovering the property. Petitioners' possession commenced in 1928. Under Act 190 (Code of Civil Procedure), an action for recovery of real property prescribes within ten years. The cause of action accrued in 1928 when respondents lost possession, and their suit filed in 1993 was 65 years too late. Furthermore, Section 41 of Act 190 allowed acquisitive prescription through ten years of actual, open, public, continuous, exclusive, and adverse possession. The Rigonan spouses possessed the property in the concept of owners since 1928, cancelled tax declarations, executed an affidavit claiming sole heirship, and sold the property, all adverse to the other heirs who were aware of these actions. Thus, petitioners acquired title by acquisitive prescription. The Court also found that laches barred the claim, as respondents failed to assert their rights for an unreasonable and unexplained length of time (over six decades), causing prejudice to petitioners who had developed and paid taxes on the property. The imprescriptibility of an action to annul a contract does not mean perpetual recovery of the property if ownership has been lost through prescription. On the issue of prescription and laches regarding the annulment: The Court held that both acquisitive prescription and laches barred respondents from recovering the property. Petitioners' possession commenced in 1928. Under Act 190 (Code of Civil Procedure), an action for recovery of real property prescribes within ten years. The cause of action accrued in 1928 when respondents lost possession, and their suit filed in 1993 was 65 years too late. Furthermore, Section 41 of Act 190 allowed acquisitive prescription through ten years of actual, open, public, continuous, exclusive, and adverse possession. The Rigonan spouses possessed the property in the concept of owners since 1928, cancelled tax declarations, executed an affidavit claiming sole heirship, and sold the property, all adverse to the other heirs who were aware of these actions. Thus, petitioners acquired title by acquisitive prescription. The Court also found that laches barred the claim, as respondents failed to assert their rights for an unreasonable and unexplained length of time (over six decades), causing prejudice to petitioners who had developed and paid taxes on the property. The imprescriptibility of an action to annul a contract does not mean perpetual recovery of the property if ownership has been lost through prescription. On the issue of Valerio Laude as a buyer in good faith: The Court did not directly rule on whether Laude was a buyer in good faith, as it found that the action to recover the property was already barred by prescription and laches, rendering the nature of Laude's purchase moot. However, the CA had previously found him not to be a buyer in good faith because he was warned that the property was co-owned and saw the cancelled tax declaration, which should have alerted him. The Supreme Court's reversal was based on prescription and laches, not on Laude's good faith. On the issue of litigation expenses and attorney's fees: The Court dismissed the complaint entirely, thus the award of litigation expenses and attorney's fees by the lower courts was necessarily set aside. On the issue of heirship: The Court did not explicitly rule on the issue of heirship as a separate point, but its decision to dismiss the complaint based on prescription and laches effectively negated any claim to the property by the respondents as alleged heirs.
Main Doctrine
Owners who, for a long period of time, fail to assert their rights to unregistered real property may be deprived of it through prescription. Inaction for several decades bars them from recovering property from those who have possessed it as owners since 1928. The purpose of prescription is to protect the diligent and vigilant, not those who sleep on their rights. The imprescriptibility of an action to annul a contract does not perpetually allow recovery of the property subject of the void contract if ownership has been lost by prescription.