G.R. No. 138945 – 409 SCRA 306 – Civil Law – Obligations and Contract – Void Contracts – Lack of Consent
In 1966, Dorotea Inot and 2 of her children, Victoriano Baba and Gregorio Baba sold a parcel of land to Felix Gochan and Sons Realty Corporation (Gochan Realty). Consequently, the title over the land was transferred to Gochan Realty.
In 1995, the other 5 children of Inot (Bestra, Maricel, Crecencia, Antonio and Petronila – all surnamed Baba) discovered the sale executed in 1966. They filed a complaint for quieting of title and reconveyance with damages against Gochan Realty. They alleged that Gochan Realty and their mother and two siblings connived in executing the extrajudicial settlement and deed of sale which fraudulently deprived them of their hereditary share in the said parcel of land. And that said transactions are void insofar as their respective shares are concerned because they never consented to the said sale and extrajudicial settlement.
The trial court dismissed the complaint filed by Baba et al as it ruled that their action has prescribed by reason of prescription and laches. It applied the rule that the fraudulent conveyance of the property creates an implied trust, an obligation created by law, which prescribes in ten years from the date of the issuance of the certificate of title.
The Court of Appeals reversed the decision of the trial court. It found that the heirs’ action is a suit to enforce an implied or constructive trust based on fraud, but it ruled that since the heirs are in possession of the disputed property, their action cannot be barred by prescription and laches, being in the nature of a suit for quieting of title.
ISSUE: Whether or not the decision of the Court of Appeals is correct.
HELD: Yes. But the ground relied upon by the CA is erroneous. The contract in question executed in 1966 is void ab initio by reason of the lack of consent from the other heirs in executing said contract. Without said consent, there can be no valid contract of sale between Inot et al and Gochan Realty. The rule is: Actions for the declaration of inexistence of contracts on the ground of absence of any of the essential requisites thereof do not prescribe.
The case is however remanded to the trial court to determine whether or not the heirs are guilty of laches (which is different from prescription). Though laches applies even to imprescriptible actions, its elements must be proved positively. Laches is evidentiary in nature which could not be established by mere allegations in the pleadings and cannot be resolved in a motion to dismiss, hence, it must be settled in the trial court. Gochan Realty is not precluded from presenting evidence that it is a purchaser in good faith or that the heirs have no personality to sue for reconveyance or, even assuming that they are lawful heirs of Dorotea Inot and Raymundo Baba, that they are guilty of laches or are estopped from questioning the validity of the extrajudicial partition and deed of sale.
