Gochan v. Baba

Art. 1410 - The action or defense for the declaration of the existence of a contract does not prescribe.
Felix Gochan and Sons Realty Corporation and Sta. Lucia Realty and Development Corporation, vs. Heirs of Raymundo Baba,
(Bestra Baba, Maricel Baba, Cresencia Baba, Antonio Baba, and Petronila Baba, represented by Attorney-in-fact Virginia
Sumalinog G.R. No. 138945 August 19, 2003
Facts: Lot No. 3537

 A conjugal property of spouses Raymundo Baba and Dorotea Inot, was originally titled underin the name of Dorotea.
 An extrajudicial settlement of his estate was executed on December 8, 1966 after Raymundo’s demise in 1947 among
the heirs of Raymundo, namely, Dorotea Inot and his 2 children, Victoriano Baba and Gregorio Baba.
o One-half undivided portion of the 6,326 square meter lot was adjudicated in favor of Dorotea, and the other
half divided between Victoriano and Gregorio.
 On December 28, 1966, Dorotea, Victoriano and Gregorio, sold the said lot in consideration of P2,346.70, to petitioner
Felix Gochan and Sons Realty Corporation (Gochan Realty).
 A Transfer Certificate of Title No. T-1842, dated February 23, 1968 was issued in favor of Gochan Realty.
 Sometime in 1995, GoChan Realty entered into a joint venture agreement with Sta. Lucia Realty and Development
Corporation Inc. for the development, among others, of Lot No. 3537, into a subdivision.
 On June 13, 1996, respondents all surnamed Baba, filed a complaint for quieting of title and reconveyance with damages
against petitioners with the RTC of Lapu-Lapu City,
o Alleging that they are among the 7 children of Dorotea Inot and Raymundo Baba;
o Petitioners connived with Dorotea Inot, Victoriano and Gregorio Baba in executing the extrajudicial settlement
and deed of sale which fraudulently deprived them of their hereditary share and
o Said transactions are void insofar as their respective shares are concerned because they never consented to the
said sale and extrajudicial settlement, which came to their knowledge barely a year prior to the filing of the
complaint.
Petitioner’s (Gochan Realty) answer:

 Respondents have no personality to sue because they are not children of Dorotea Inot and Raymundo Baba;
 Assuming they are lawful heirs of the spouses, their action is barred by estoppel, laches and prescription for having been
filed more than 28 years after the issuance of the transfer certificate of title in its name; and
 Any defect in the transactions leading to its acquisition of the lot will not affect its title because it is a purchaser in good
faith and for value.
 Sta. Lucia Realty and Development Corporation Inc. was declared in default for failure to file an answer within the
reglementary period.
Trial Court’s Ruling

 On May 3, 1997, the complaint for quieting of title and reconveyance with damages filed against petitioner was dismissed
on the ground of prescription and laches.
 The respondents action is one for enforcement of implied or constructive trust based on fraud which prescribes in 10
years from the issuance of title over the property.
 The action was barred by prescription and laches for having been filed after 28 years from the time Gochan Realty
obtained title to the property.
CA’s Ruling
 Reversed the decision of the trial court and reinstated the complaint of respondents.
 Since respondents 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.
Issues:
1. WON respondents complaint is dismissible on the ground of prescription.
2. WON respondents complaint is dismissible on the ground of laches.
Held:
1. No, the dismissal of respondents complaint on the ground of prescription was erroneous.
 The absence of any of the essential requisites renders the contract inexistent and an action or defense to declare said
contract void ab initio does not prescribe, pursuant to Article 1410 of the same Code.
 In Delos Reyes v. Court of Appeals, the consent and the capacity to give consent of the parties to the contract, is an
indispensable condition for the existence of consent.
 In Heirs of Romana Ingjug-Tiro v. Casals, the Court, applying Article 1410 of the Civil Code declared that a claim of
prescription is unavailing where the assailed conveyance is void ab initio with respect to those who had no knowledge of
the transaction.
o The case involved a fraudulent sale and extrajudicial settlement of a lot executed without the knowledge and
consent of some of the co-owners.
o It was held that the sale of the realty is void in so far as it prejudiced the shares of said co-owners and that the
issuance of a certificate of title over the whole property in favor of the vendee does not divest the other co-owners
of the shares that rightfully belonged to them.
o In actions for reconveyance of property predicated on the fact that the conveyance complained of was null and
void ab initio, a claim of prescription of action would be unavailing.
o The action or defense for the declaration of the inexistence of a contract does not prescribe
 Assuming that the allegations in respondents complaint are true, their claim that the execution of the extrajudicial
settlement and the deed of sale involving Lot No. 3537, which led to the issuance of a certificate of title in the name of
Gochan Realty, was without their knowledge or consent, gives rise to an imprescriptible cause of action to declare said
transactions inexistent on the ground of absence of legal capacity and consent.
2. No. The dismissal of the complaint on the ground of laches is premature.

 Laches is defined as failure or neglect for an unreasonable and unexplained length of time, to do that which, by exercising
due diligence, could or should have been done earlier.
 It is negligence or omission to assert a right within a reasonable time, warranting presumption that the party entitled to
assert it has abandoned it or has declined to assert it.
o Its elements are:
1. Conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation which the
complaint seeks a remedy;
2. Delay in asserting the complainants rights, the complainant having had knowledge or notice of the defendants
conduct as having been afforded an opportunity to institute a suit;
3. Lack of knowledge or notice on the part of the defendant that the complainant would assert the right in which he
bases his suit; and
4. Injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held
barred.
 Laches applies even to imprescriptible actions and is evidentiary in nature
 The parties be allowed to substantiate their respective claims and defenses in a full-blown trial, and obtain a ruling on all
the issues presented in their pleadings.
 Indeed, while the averments in the complaint show that respondents action is imprescriptible, Gochan Realty is not
precluded from presenting evidence that it is a purchaser in good faith or that respondents 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 of Lot No. 3537 with
respect to their shares.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals which ordered that the instant case be REMANDED
to the Regional Trial Court of Lapu-Lapu City,for trial and judgment on the merits is AFFIRMED.
WON possession is material in the case at bar.

No, the issue of possession, however, is not material in the case at bar.
 The settled rule is that the purpose of an action or suit and the law to govern it, including the period of prescription, is to
be determined by the complaint itself, its allegations and prayer for relief.
 In the case at bar, the allegations of the complaint unmistakably assail the extrajudicial settlement and deed of sale with
respect to their share on the ground of absence of consent.
 Respondents alleged that Dorotea Inot, Gregorio Baba, Victoriano Baba and defendant Felix Gochan and Realty
Corporation, conniving and confederating with each other, with the evil motive and bad intent of getting the
corresponding hereditary share of the plaintiffs caused the [issuance of a] Transfer Certificate of Title covering the entire
lot in the name of defendant Felix Gochan and Realty Corporation
 For purposes of determining whether respondents action has prescribed, fraud in the conveyance of the disputed lot and
the possession thereof by the respondents are not material.
Article 1458 of the New Civil Code provides: By the contract of sale one of the contracting parties obligates himself to transfer
the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.
 It is essential that the vendors be the owners of the property sold otherwise they cannot dispose that which does not
belong to them.
 As the Romans put it: Nemo dat quod non habet.
 No one can give more than what he has.
 The sale of the realty to respondents is null and void insofar as it prejudiced petitioners interests and participation
therein.
 The issuance of a certificate of title in their favor could not vest upon them ownership of the entire property; neither could
it validate the purchase thereof which is null and void.
 Registration does not vest title; it is merely the evidence of such title.
 To form a valid and legal agreement it is necessary that there be a party capable of contracting and a party capable of
being contracted with.
 The death of a person terminates contractual capacity.

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Art. 1410 - The action or defense for the declaration of the existence of a contract does not prescribe.

Facts: Lot No. 3537

Petitioner’s (Gochan Realty) answer:

Trial Court’s Ruling

2. No. The dismissal of the complaint on the ground of laches is premature.

WON possession is material in the case at bar.

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