NARCISO BUENAVENTURA AND MARIA BUENAVENTURA, PETITIONERS, VS. HON. COURT OF APPEALS AND MANOTOK REALTY, INC., RESPONDENTS.

Before Us is a petition for review on certiorari of a
Decision of the Special Former Ninth Division of the Court of Appeals rendered
on February 19, 1979, in CA-G.R. No. 08249-SP (Reyes, Sundiam [P], and Cortez,
JJ; Rollo, pp. 22-28) ordering the dismissal of the complaint in Civil Case No.
C-6095 filed by herein petitioners against Lorenzo Caiña, Francisca
Caiña-Rivera, the National Housing Authority (formerly PHHC), Francisco M.
Custodio, and respondent Manotok Realty, Inc., before then Court of First
Instance of Rizal, Branch XXXIII, Caloocan City.

The relevant antecedents, as narrated by respondent court, are as
follows:

“(1) During his
lifetime, Julian Caiña, was the
occupant and tenant of a parcel of land, owned by the Republic of the
Philippines but administered at first by the then Rural Progress Administration
and later by the Peoples Homesite and Housing Corporation (PHHC) described as
Lot 20 of Consolidated-Sub?division plan LRC Pcs-1828, and in Transfer
Certificate of Title No. 365557 of the Registry of Deeds of Caloocan City, with
an area of 25,776 square meters;

(2) The Republic of the
Philippines acquired the aforesaid lot, together with other lots in the
Gonzales Estate by Expropriation to be resold to qualified and bonafide
tenants-occupants and, to achieve this end, the President of the Philippines,
on August 30, 1961, designated the PHHC with the task of selling and
transferring the said lots to qualified tenants concerned and/or their lawful
heirs;

(3) Julian Caiña had a
brother, Justo Caiña. The latter had
three children, namely, Emeteria Caiña Buenaventura, Lorenzo Caiña and Francisca
Caiña. Emeteria Caiña Buenaventura died
as early as July 11, 1937 and was survived by Maria Buenaventura and Narciso
Buenaventura, the Private Respondents in this case;

(4) However the Gonzales
Estate still had to be sub-divided into lots; but before the subdivision of the
property and the subdivision plan thereof could be approved and said lot
transferred to Julian Caiña, the latter died on December 17, 1961. Justo Caiña, the brother, died later on May
3, 1962;

(5) Thus, at the time
Julian Caiña died, he was survived as his sole heirs, by his brother, Justo
Caiña and the latter’s children, Lorenzo Caiña and Francisca Caiña; also
surviving him were the private respondents Narciso Buenaventura and Maria Buenaventura,
the children of Emeteria Buenaventura who died earlier in 1937;

(6) On November 4, 1965,
the Peoples Homesite and Housing Corporation executed a ‘Deed of Absolute Sale’
over the said lot to Lorenzo Caiña and Francisca Caiña-Rivera, as the sole heirs
and successors-in-interest      of Julian
Caiña for and in consideration of the purchase price of P96,048.80 (a certified
xerox copy of the aforesaid Deed is hereto attached as Annex ‘A’ hereof);

(7) By virtue of the said
sale, Lorenzo Caiña and Francisca Caiña-Rivera were issued, on November 5,
1965, Transfer Certificate of Title No. 21013 over the said lot by the Registry
of Deeds of Caloocan City (certified xerox copy of the aforesaid title is
hereto attached as Annex ‘B’ hereof);

(8) On January 26, 1966,
Lorenzo Caiña and Francisca Caiña-Rivera executed a ‘Deed of Absolute Sale’
over the said lot in favor of Francisco M. Custodio after which the latter was
issued on January 26, 1966, Transfer Certificate of Title No. 21484 of the
Registry of Deeds of Caloocan City (a certified xerox copy of the aforesaid
Deed of Absolute Sale and Transfer Certificate of title are hereto attached as
Annexes ‘C’ and ‘D’ hereof respectively);

(9) On January 26, 1966,
Francisco Custodio executed a ‘Deed of Absolute Sale’ over the said lot in
favor of the Petitioner for which the latter was issued on January 26, 1966,
Transfer Certificate of Title No. 2145 of the Registry of Deeds of Caloocan
City (a certified xerox copy of the said Deed of Absolute Sale and Title are
hereto attached as Annexes ‘E’ and ‘F’ hereof
respectively);

(10) On December 24, 1976,
Private Respondents [now petitioners] filed a complaint with the respondent
court docketed as Civil Case No. C-6095 entitled ‘Narciso Buenaventura and
Maria Buenaventura vs. Lorenzo Caiña, Francisca Caiña, National Housing
Authority (formerly PHHC), Francisco M. Custodio, Manotok Realty, Inc.’ for
Annulment of Titles, Contracts and/or Sales, Reconveyance and Damages (a copy of
the aforesaid complaint attached hereto as Annex ‘G’ hereof);

(11) The Petitioner [now
private respondent Manotok Realty] subsequently filed with the Respondent Court
a ‘Motion to Dismiss’ the aforesaid complaint on the ground of, inter alia,
prescription (a copy of the aforesaid motion is hereto attached as Annex
‘H’ hereof);

(12) The Private
Respondents, how­ever filed their Opposition to the aforesaid motion of the
Petitioner (a copy of the aforesaid opposition is hereto attached as Annex ‘I’
hereof);

(13) On July 28, 1977, the
Respond­ent Court issued an Order denying the aforesaid Motion of the
Petitioner (a certified xerox copy of the aforesaid order is hereto attached as
Annex ‘J’ hereof);

(14) The Petitioner
thereafter filed a ‘Motion for Reconsideration’ of the aforesaid Order, to
which the private respondents filed their opposition. The petitioner, however, filed its Reply to the aforesaid
opposition of the private respondents despite which the respondent court, on
July 21, 1978 issued an order denying the aforesaid motion of the petitioner (a
copy of each aforesaid motion, opposition and reply are hereto attached as
Annexes ‘K’, ‘L’ and ‘M’, hereof respectively; while a certified xerox copy of
the aforesaid Order is hereto attached as Annex ‘N’ hereof).” (Decision, pp.
1-3; rollo, pp. 22-24.)

Aggrieved by the ruling of the trial court, herein private
respondents filed a petition with the Court of Appeals which later granted the
petition and ordered the dismissal of the complaint of then private
respondents, now herein petitioners, on the ground that their action has
already prescribed. A subsequent motion
for reconsideration was to no avail.

Hence, the instant petition.

Both sides offer  conflicting
opinions   on the applicability of Article
1410 of the Civil Code of the Philippines.

The Court of Appeals, in directing the dismissal of the complaint
filed by the petitioners in the court of origin, held that Article 1410 of the
Civil Code on imprescriptibi­lity of actions is not applicable because fraud in
the transfer of the property was alleged in petitioners’ com­plaint. The Court of Appeals was, of course,
referring to paragraph 20 of the Complaint which reads:

“20. That in
executing the said ‘Deed of Absolute Sale’ over Lot 20 in favor of defendants
Lorenzo Caiña and Francisca Caiña-Rivera, defendant NHA acted with evident bad
faith, gross negligence and carelessness, while defendants Lorenzo Caiña and
Francisca Caiña acted with false representations, fraud and deceit and the
three defendants connived, conspired and schemed to deprive the plaintiffs of their
rights over 1/3 portion of Lot 20 of the Gonzales Estate administered by
defendant NHA, to the damage and prejudice of the herein plaintiffs;”
(Rollo, p. 17.)

Respondent court further stated that due to the allega­tion that
fraud was supposedly employed in the execution of the deed of sale and
thereafter in the issuance of Transfer Certificate of Title No. 21484, there
was created in favor of then private respondents, now petitioners, an implied
or constructive trust, such that the action for reconveyance must be filed by
the defrauded party within a period of ten (10) years from the date of issuance
of the title, other wise, the action prescribes. Consequently, respondent court held that because the complaint in
Civil Case No. C-6095 was filed only on December 28, 1976 or after more than
ten years from the issuance of the transfer certi­ficate of title on January
26, 1966, the assertion for recovery of property based on fraudulent transfer
and regis­tration can no longer be entertained (Rollo, pp. 27-28).

Petitioners, on the other hand, argue otherwise. They claim that the action for reconveyance
is based both on the grounds of fraud and simulation of contracts, hence, it
cannot be made subject to the rule on prescription
of action. (Rollo, p. 15).

We agree with respondent court.

Petitioners’ allegation in their complaint filed in the court of
origin, that fraud was employed in the execution of a deed of sale and
subsequently, in the issuance of a transfer certificate of title, renders their
action for reconveyance susceptible to prescription either within 4 years or 10
years. In the present case, even if one
bends backwards and considers the circumstances alleged as having created an
implied or constructive trust, such that the action for reconveyance would
prescribe in the longer period of 10 years (Duque vs. Doming, 80 SCRA 654 (1977]; Vda de Nacalaban vs. Court of Appeals, 80 SCRA 428 [1977]; Cerantes vs. Court of Appeals, 76 SCRA 514 [1977]; Jaramil vs. Court of Appeals 78 SCRA 420 [1977]), still
petitioners’ action is plainly time-barred. Considering that the deed of sale executed by the Philippine Homesite
and Housing Corporation in favor of Lorenzo Caiña and Francisca Caiña-Rivera
was executed on November 4, 1965 and on the following day, Transfer Certificate
of Title No. 21484 was issued in favor of the vendees (private respondents),
the party allegedly defrauded in the transaction, herein petitioners, had only
10 years or until September 5, 1975 within which to file the appropriate
action. In the instant case, the action
was filed only on December 28, 1976, which was beyond the prescribed period set
by law.

Verily, the principle on prescription of actions is designed to
cover situations such as the case at bar, where there have been a series of
transfers to innocent purchasers for value. To set aside these transactions only to accommodate a party who has
slept on his rights is anathema to good order.

Independently of the principle of prescription of actions working
against petitioners, the doctrine of laches may further be counted against
them, which latter tenet finds application even to imprescriptible
actions. Thus, in Rafols vs. Barba
(119 SCRA 146 [1982]), We find the following words of wisdom:

“In the least, plaintiffs-appel­lants are already guilty of
laches as would effectively derail their cause of action. While it is true that, technically, the
action to annul a void or inexistent contract does not prescribe, it may
nonetheless be barred by laches. As was
stated in Nielson & Co. v. Lepanto Consolidated Mining Co., L-21601,
December 17, 1966, 18 SCRA [1040]:

‘The defense of laches applies independently of prescription. Laches is different from the statute of
limitations. Prescription is concerned
with the fact of delay, whereas laches is concerned with the effect of
delay. Prescription is a matter of
time; laches is principally a question of inequity of permitting a claim to be
enforced, this inequity being founded on the same change in the condition of
the property or the relation of the parties. Prescription is sta­tutory; laches is not. Laches applies in equity, whereas prescription applies at
law. Prescription is based on fixed
time; laches is not.’

The essential elements of the prin­ciple of laches are all present herein, to wit:

‘xxx xxx xxx (1) conduct on the part of the defendant, or one under
whom he claims, giving rise to the situation that led to the complaint and for
which the complaint seeks a remedy; (2) delay in asserting the complainant’s
rights, the complainant having had knowledge or notice of the defendant’s
conduct and 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 on 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.’ (Yusingco vs. Ong Hing Lian, 42 SCRA 589.)

The defendant-appellee purchased the parcel of land in question
giving rise to the complaint of herein plaintiffs-appellants. The latter delayed the assertion of their
supposed right to annul the sale for a period of over fifteen (15) years
despite knowledge or notice of
such sale. They had all the opportunity
within that period of time to take action to set aside or annul the sale. Defendant-appellee was never apprised of any
intention on the part of plaintiffs-appellants to annul the sale until this
action was filed. Finally, the
defendant-appellee stands to lose the property in question if the suit
filed against him by plaintiffs-appel­lants shall not be deemed barred.”
(at pp. 154-155.)

WHEREFORE, premises considered, the judgment appealed from
is hereby AFFIRMED in toto.

SO ORDERED.

Gutierrez, Jr.,
(Chairman), Bidin, Davide, Jr., and Romero,
JJ., concur.