Aznar Brothers Realty Company vs. Heirs of Aniceto Augusto & Petrona Calipan

An action for reconveyance of property predicated on the nullity of a deed of sale that is void ab initio — because the vendors were not the true owners and the real owners' consent was absent — is imprescriptible under Article 1410 of the Civil Code, and the defense of laches is likewise unavailable against the enforcement of an imprescriptible legal right.

Aniceto Augusto and Petrona Calipan owned Lot No. 4397 in Mactan, Lapu-Lapu City, Cebu. Aniceto died on December 3, 1934, leaving five children: Geronimo, Zacarias, Teoderica, Arsenia, and Irenea. The property remained undivided, as reflected in a 1945 tax declaration in Petrona Calipan's name. Sometime in 1962, an extrajudicial partition was executed, leading to cancellation of Calipan's tax declaration and issuance of new declarations to several individuals. On February 13, 1962, these individuals sold the property to Aznar Brothers Realty Company. Carlos Augusto — a grandson, not a son, of Aniceto — later petitioned for reconstitution of title. On April 15, 1963, Transfer Certificate of Title No. 0070 was issued to Aznar Realty. In November 1991, the heirs of Aniceto Augusto and Petrona Calipan were evicted from the land, which had since been developed into a subdivision. They filed suit on July 28, 1992.

• The Property and Owners: Lot No. 4397, Opon Cadastre, located in Dapdap, Mactan, Lapu-Lapu City, Cebu, was owned by spouses Aniceto Augusto and Petrona Calipan. Aniceto died on December 3, 1934, survived by his wife and five children: Geronimo, Zacarias, Teoderica, Arsenia, and Irenea. The property remained undivided after Aniceto's death, as shown by Tax Declaration No. 02679 issued to Petrona Calipan in 1945.

• The Purported Partition and Sale: In 1962, Tax Declaration No. 02679 was cancelled pursuant to an "Extrajudicial Partition" executed before Notary Public Vicente Fanilag. Tax declarations covering Lot No. 4397 were thereafter issued to Filomeno Augusto, Ciriaco Icoy, Felipe Aying, Zacarias Augusto, Abdon Augusto, Teoderica Augusto, Pedro Tampus, and Anacleto Augusto. On February 13, 1962, these individuals sold the property to petitioner Aznar Brothers Realty Company through a Deed of Sale of Unregistered Land, which was registered on the same date.

• Reconstitution of Title: On September 6, 1962, Carlos Augusto — a grandson of Aniceto, being the son of Zacarias — filed a Petition for Reconstitution of Title, claiming to be an heir of his "father Aniceto." He alleged the original and duplicate owner's copies of the title were lost during the war.

• Declaration of Heirs: On February 28, 1963, an "Affidavit of Declaration of Heirs of Aniceto Augusto" was executed by Zacarias, Teoderica, Arsenia, and Irenea (Geronimo having died in December 1961), declaring that Aniceto left behind 15 parcels of land. The affidavit was signed by Zacarias and thumbmarked by the other siblings, with Carlos Augusto and Filomeno Augusto as witnesses.

• Issuance of Title: On April 15, 1963, Transfer Certificate of Title No. 0070 was issued to petitioner Aznar Realty, which subsequently secured Tax Declaration No. 01937.

• The Heirs' Allegations: Respondents alleged that the vendors in the Deed of Sale were not the true owners of the land; they were not even heirs of Aniceto Augusto and Petrona Calipan. Teoderica Augusto Andales, the only surviving child of the spouses and one of the named vendors, denied selling the property and claimed she was unaware she had purportedly done so. The heirs alleged that Carlos Augusto and petitioner's lawyer connived in filing the petition for reconstitution and that the 1963 Declaration of Heirs was fabricated to distribute the property to strangers after the sale was executed. The heirs further contended they remained in possession of the property until they were evicted by petitioner in November 1991.

• Discovery and Eviction: Respondents discovered the land had been sold to Aznar Realty only in 1991 when they were evicted. Most of the heirs were unschooled farmers who could not read and write; they had entrusted all land-related matters to Carlos Augusto and had no reason to suspect he would defraud them. They filed Civil Case No. 2666-L on July 28, 1992, approximately eight months after eviction.

• Petitioner's Position: Aznar Realty interposed the defense of prescription and laches, contending that the action was filed 30 years after registration of the Deed of Sale and 29 years after issuance of the TCT. Petitioner also argued that respondents were opportunistic, seeking to profit after the land had been developed into an upscale subdivision.

• Prescription of Action: Petitioner argued that respondents' action for recovery of property had prescribed, having been filed 30 years after the registration of the Deed of Sale (1962) and 29 years after the issuance of TCT No. 0070 (1963). Relying on Cañete v. Benedicto, Gerona v. de Guzman, Gicano v. Gegato, and Casipit v. Court of Appeals, petitioner maintained that an action for reconveyance based on fraud prescribes 10 years from registration or discovery of fraud, and constructive notice from registration bound the whole world.

• Laches: Petitioner contended that respondents were barred by laches for sleeping on their rights for nearly three decades, bringing suit only after the property had been developed into a subdivision.

• Nullity of the Deed of Sale: Respondents argued that the Deed of Sale was void ab initio because the vendors were not the true owners of the land; they were not heirs of Aniceto Augusto and Petrona Calipan. Teoderica Augusto Andales, one of the named vendors and the sole surviving child, denied consenting to the sale.

• Imprescriptibility: Respondents maintained that under Article 1410 of the Civil Code, an action for declaration of the inexistence of a contract does not prescribe, and the defense of laches cannot defeat an imprescriptible legal right.

• Prescription: Whether respondents' action for reconveyance was barred by prescription.

• Laches: Whether respondents were guilty of laches in seeking recovery of the property.

• Imprescriptibility of Action: Whether the Court of Appeals erred in applying Article 1410 of the Civil Code and ruling the action imprescriptible.

• Prescription and Imprescriptibility: The action was imprescriptible because respondents sought not merely reconveyance based on fraud, but the declaration of nullity of the Deed of Sale on the ground of absence of consent of the true owners. The complaint alleged that the vendors were not the lawful owners and that one of the real owners, Teoderica Augusto Andales, was unaware she was selling the land. Thus, the Deed of Sale was void ab initio, not merely voidable. Under Article 1410 of the Civil Code, the action or defense for the declaration of the inexistence of a contract does not prescribe. Heirs of Romana Injug-Tiro v. Casals was squarely applicable: where the complaint is premised on the nullity of a deed of sale because the vendor-signatories were not direct and compulsory heirs, and the true owners' consent was absent, the action is imprescriptible.

• Laches: Laches could not be invoked to defeat respondents' claim. As ruled in Injug-Tiro, the positive mandate of Article 1410 of the New Civil Code confers imprescriptibility to actions for declaration of the inexistence of a contract and preempts equitable considerations. Courts are primarily courts of law, not equity; equity should be applied only in the absence of, and never contrary to, statutory law (Aequitas nunguam contravenit legis). Moreover, respondents were not guilty of laches on the facts: they discovered the sale only upon eviction in 1991, filed suit eight months later in July 1992, and had no reason to suspect Carlos Augusto would defraud them since they remained in possession until ejection.

• Finding of the Court of Appeals: The Court of Appeals did not err in reversing the trial court's dismissal and remanding the case for trial. The complaint's allegations sufficiently raised the issue of nullity of the Deed of Sale, which could not be precluded by prescription at the preliminary stage.

• Imprescriptibility of Action for Declaration of Nullity of Void Contract — An action for reconveyance predicated on the nullity of a deed of sale that is void ab initio — because the vendors were not the true owners and the real owners' consent was absent — is imprescriptible. Article 1410 of the Civil Code expressly provides: "The action or defense for the declaration of the inexistence of a contract does not prescribe." In this case, the complaint alleged that the vendors were strangers to the Augusto family with no rights over the property, and that the sole surviving child-owner who was listed as a vendor had no knowledge or consent to the sale. The Court treated this as an action for declaration of nullity, not merely an action for reconveyance based on fraud, and accordingly applied Article 1410.

• Laches Inapplicable to Imprescriptible Rights — Laches, a doctrine in equity, cannot be invoked to bar the enforcement of an imprescriptible legal right. Courts are courts of law, not equity; equity should be applied only in the absence of, and never contrary to, statutory law (Aequetas nunguam contravenit legis). The positive mandate of Article 1410 preempts all equitable arguments based on the lapse of time. Here, respondents could validly vindicate their inheritance despite the passage of nearly three decades.

• Distinction Between Void and Voidable Contracts in Prescription — Contracts that are void ab initio due to absence of consent of the true owners are distinct from voidable contracts tainted with fraud. The former are subject to imprescriptible actions for declaration of nullity; the latter prescribe within the periods established by law (10 years for reconveyance based on fraud, counted from registration or discovery).

• "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. The action or defense for the declaration of the inexistence of a contract does not prescribe." — The Court, citing Injug-Tiro, articulated the core principle distinguishing void from voidable contracts and underscoring the statutory basis in Article 1410.

• "Laches is a doctrine in equity and our courts are basically courts of law and not courts of equity. Equity, which has been aptly described as 'justice outside legality,' should be applied only in the absence of, and never against, statutory law. Aequetas nunguam contravenit legis. The positive mandate of Art. 1410 of the New Civil Code conferring imprescriptibility to actions for declaration of the inexistence of a contract should pre-empt and prevail over all abstract arguments based only on equity." — The Court rejected petitioner's laches defense and clarified the hierarchy between statutory law and equitable doctrines.

• Heirs of Romana Injug-Tiro v. Casals, 363 SCRA 435 (2001) — Controlling precedent. Applied directly by the Court. In Injug-Tiro, the Supreme Court similarly held that an action for declaration of nullity of a deed of sale and extrajudicial settlement is imprescriptible where the vendor-signatories were not heirs and the true owners' consent was absent.

• Castillo v. Heirs of Madrigal, 198 SCRA 556 (1991) — Cited with approval by the Court of Appeals. The Supreme Court in Castillo ruled that an action for declaration of the inexistence of a deed of sale is imprescriptible due to absence of the vendors' consent under Article 1410, although the complaint there was dismissed for failure to state a cause of action on other grounds.

• Article 1410, New Civil Code — "The action or defense for the declaration of the inexistence of a contract does not prescribe." This provision formed the statutory foundation for the ruling. The Court applied it to an action for reconveyance based on a void deed of sale where the vendors were not true owners and the real owners' consent was absent.

Acting Chief Justice Vitug, Justice Sandoval-Gutierrez, and Justice Carpio-Morales concurred.