G.R. No. 138945 ; August 19, 2003
Felix Gochan and Sons Realty Corporation and Sta. Lucia Realty and Development Corporation, Petitioners, vs. Heirs of Raymundo Baba, namely, Bestra Baba, Maricel Baba, Cresencia Baba, Antonio Baba, and Petronila Baba, represented by Attorney-in-fact Virginia Sumalinog, Respondents.

FACTS

The case involves Lot No. 3537, originally a conjugal property of spouses Raymundo Baba and Dorotea Inot. After Raymundo’s death, an extrajudicial settlement was executed in 1966 among Dorotea and two children, Victoriano and Gregorio Baba, adjudicating the lot to them. They subsequently sold the entire lot to petitioner Felix Gochan and Sons Realty Corporation in 1966, leading to the issuance of a Transfer Certificate of Title in 1968. In 1996, respondents, claiming to be other children of the spouses, filed a complaint for quieting of title and reconveyance with damages. They alleged that the extrajudicial settlement and deed of sale were fraudulent and executed without their consent, depriving them of their hereditary shares.
The Regional Trial Court dismissed the complaint on grounds of prescription and laches, ruling it as an action to enforce an implied trust based on fraud, which prescribes in ten years from title issuance. The Court of Appeals reversed, holding that since respondents were in possession of the property, their action for quieting of title did not prescribe. Petitioners sought review, arguing the action was time-barred.

ISSUE

Whether or not respondents’ complaint is dismissible on the ground of prescription and laches.

RULING

No, the complaint is not barred by prescription. The Supreme Court clarified that the nature of an action is determined by the allegations in the complaint. While captioned as quieting of title and reconveyance, the core allegation was that the respondents never consented to the extrajudicial settlement and sale. This effectively assails the very existence of those contracts due to the absence of consent, an essential requisite. An action for declaration of nullity of a void contract, such as one lacking consent, is imprescriptible. The Court distinguished this from an action for reconveyance based on an implied trust arising from fraud, which prescribes in ten years. Here, the respondents’ cause of action stemmed from the intrinsic nullity of the contracts for lack of consent, not merely from extrinsic fraud in their execution. Consequently, the prescriptive period for implied trusts did not apply. The Court reinstated the complaint for further proceedings to determine the validity of the contracts and the parties’ rights.