Philippine National Bank v. Militar
REITERATIONFacts
The Antecedents: Deogracias, Glicerio, Tomas, and Caridad Militar were co-owners of Lot Nos. 3011 and 3017. Deogracias sold his shares in these lots in 1941. Later, in 1975, Deogracias, Glicerio, Tomas, and Caridad purportedly sold Lot No. 3011 to spouses Jalbuna, and Glicerio, Tomas, and Caridad purportedly sold Lot No. 3017-B to the same spouses. Consequently, new titles were issued to the Jalbunas. Spouses Jalbuna mortgaged Lot No. 3017-B to Philippine National Bank (PNB), which foreclosed the mortgage and later sold the lot to spouses Johnny and Nona Lucero. Spouses Lucero filed an ejectment case against the Militar heirs occupying the lot. Procedural History: The heirs of Deogracias Militar filed a complaint against spouses Jalbuna, PNB, and spouses Lucero for reconveyance of title, annulment of sale, cancellation of titles, and damages. The Regional Trial Court (RTC) dismissed the complaint, holding that the deeds of sale were void but that PNB and spouses Lucero were buyers in good faith, and the action for reconveyance had prescribed. The Court of Appeals (CA) reversed the RTC decision, declaring the titles of spouses Jalbuna and spouses Lucero void and ordering reconveyance to the original co-owners. The CA held that PNB and spouses Lucero were not buyers in good faith and that the action for reconveyance based on implied trust does not prescribe. The Petition: PNB and spouses Lucero filed consolidated petitions for review assailing the CA decision and resolution.
Issue(s)
Whether the case was brought by all indispensable parties. Whether petitioners PNB and spouses Lucero were mortgagee and purchasers in good faith, respectively. Whether the action for reconveyance has prescribed or is barred by laches.
Ruling
The petitions are DENIED. The decision of the Court of Appeals dated June 4, 2004, and its resolution dated August 4, 2004, are AFFIRMED in toto.
Ratio Decidendi
On the issue of indispensable parties: The Court held that the case was properly brought by the respondents. An indispensable party is one whose interest is so intertwined with the subject matter that no complete determination of the case can be had without them. However, in an action for reconveyance, the ultimate relief sought is the return of titles to their rightful owners, which in this case would revert to the estates of the deceased co-owners. The interests of individual heirs are divisible and can be ventilated in a separate partition case. Therefore, a co-heir may bring such an action without necessarily joining all other co-heirs, as the suit is deemed for the benefit of all. The presence of other heirs would only make them necessary parties, not indispensable. On the issue of PNB and spouses Lucero being mortgagee and purchasers in good faith: The Court affirmed the CA's finding that petitioners were not in good faith. Whether a party is a buyer or mortgagee in good faith is a factual matter generally not reviewable in a petition for review on certiorari. The Court found that PNB, as a banking institution, failed to exercise the required due diligence when it mortgaged the property, especially since it was in possession of persons other than the mortgagors. PNB should have inquired about the rights of the possessors. Similarly, spouses Lucero, as neighbors, could have verified the property's status by inquiring from the possessors, which they failed to do. Thus, they could not be considered buyers in good faith. On the issue of prescription and laches: The Court reiterated that an action for reconveyance based on a simulated or fictitious deed of sale is an action for the declaration of nullity of a void contract, which does not prescribe. The complaint filed was for reconveyance due to simulated and fictitious deeds of sale, thus amounting to an action for declaration of nullity. Furthermore, laches, being a doctrine of equity, cannot prevail against a statutory law that makes an action imprescriptible. The positive mandate of Article 1410 of the Civil Code, which confers imprescriptibility to actions for the declaration of the inexistence of a contract, must prevail over abstract arguments based on equity. Therefore, respondents could validly vindicate their inheritance despite the lapse of time.
Main Doctrine
An action for reconveyance based on a simulated or fictitious deed of sale is an action for the declaration of nullity of a void contract, which does not prescribe. Furthermore, laches cannot be invoked to resist the enforcement of an imprescriptible legal right.