G.R. No. 177616 August 27, 2014
HEIRS OF SPOUSES JOAQUIN MANGUARDIA and SUSANA MANALO, namely: DANILO MANGUARDIA, ALMA MANGUARDIA, GEMMA MANGUARDIA, RODERICK MANGUARDIA, MADELINE MANGUARDIA, joined by her husband, RODRIGO VILLARANTE, ALAN MANGUARDIA, ROSE MANGUARDIA, joined by her husband, LEOPOLDO ADRID, JR., RONALD MANGUARDIA, JOEBERT MANGUARDIA, and RANDY MANGUARDIA; HEIRS OF SPOUSES LEONARDO ARAZA and REBECCA ARROYO, namely: MARY MAGDALENA ARAZA, joined by her husband CARLITO VILLANUEVA, NENITA ARAZA, joined by her husband, LEONARDO BADE, ANTONIO ARAZA, and the children of ENECITA ARAZA VARGAS, namely: GADFRY VARGAS, GINA VARGAS, JOEL VARGAS, MARY GRACE VARGAS, ANA MAE VARGAS, and the minor JUNAR VARGAS, represented by his guardian ad litem MAGDALENA ARAZA-VILLANUEVA, and THE REGISTER OF DEEDS OF CAPIZ, Petitioners,

vs.
HEIRS OF SIMPLICIO VALLES and MARTA VALLES, represented by GRACIANO VALLES, SULPICIO VALLES, TERESITA VALLES, joined by her husband, LEOPOLDO ALAIR, and PRESENTACION CAPAPAS-VALLES, Respondents.

FACTS

Marta and Simplicio Valles were the registered owners of Lot 835. Marta died in 1943 and Simplicio died on April 20, 1957. However, a notarized Deed of Absolute Sale dated October 28, 1968, ostensibly bearing the signature of Marta and the thumb marks of Simplicio and his wife, was executed in favor of their brothers Melquiades and Rustico, Simplicio’s daughter Adelaida, and Marta’s daughter Encarnacion. This deed resulted in the cancellation of the original title and the issuance of a new TCT, followed by a subdivision into four lots (835-A to 835-D) with titles issued to the four buyers. These lots were subsequently sold and transferred among relatives. Lot 835-A remained with Adelaida but was possessed by her nephew Graciano. Lots 835-B and 835-C were eventually sold to spouses Joaquin Manguardia and Susana Manalo Manguardia. Lot 835-D was sold to spouses Leonardo Araza and Rebecca Arroyo. In 1999, the heirs of Simplicio and Marta filed an action for declaration of nullity of the deeds of sale and certificates of title, alleging the 1968 Deed of Absolute Sale was a forgery as the vendors were already deceased. Petitioners, the subsequent buyers, claimed they were purchasers in good faith and for value and asserted the action was barred by prescription, estoppel, and laches.

ISSUE

Whether the petitioners are innocent purchasers in good faith and for value, and whether the action for annulment is barred by prescription, estoppel, or laches.

RULING

No. The Supreme Court affirmed the lower courts’ decisions. The Deed of Absolute Sale dated October 28, 1968, was void ab initio because the vendors, Marta and Simplicio Valles, were already deceased at the time of its execution. Consequently, all subsequent titles emanating from this void deed were also null and void. The petitioners could not be considered innocent purchasers in good faith. The transfers of the properties were not made to strangers but were limited to close relatives by affinity and consanguinity, indicating the transactions were not in good faith. The burden of proving good faith lies with the party asserting it, and the petitioners failed to discharge this burden. Furthermore, the action for the declaration of the deed’s nullity is imprescriptible as it is based on a void contract. The defense of laches was also unavailing because the respondents’ delay in asserting their right was not unreasonable, as they discovered the fraudulent documents only in September 1998 and filed the action in December 1999.