G.R. No. 230599 , January 20, 2021
Alfredo Sulit, Julita Sulit, and the Heirs of Arsenio Sulit, represented by Alfredo Sulit, Petitioners, vs. Spouses Eugenio and Zenaida Alfonso, Spouses Efren and Eugenia Sulit, Spouses Reynaldo and Norma Dizon, Spouses Manalili, Leonilo Danilo Disor, Eiselle S. Alfonso, Elita S. Alfonso, Edwin S. Alfonso, Crisanta Magtalas and the Register of Deeds of Bulacan, Respondents.

FACTS

Spouses Arsenio and Julita Sulit owned a 4,086-square meter property in Pulilan, Bulacan. On October 15, 1979, they executed a Deed of Absolute Sale conveying the property to their children, Efren and Zenaida (married to Eugenio Alfonso), for P3,000.00. Transfer Certificate of Title (TCT) No. T-257536 was issued to Spouses Efren Sulit and Spouses Alfonso. On December 6, 1979, the children executed a counter Deed of Sale reconveying the property to their parents. Despite this, Spouses Efren Sulit and Spouses Alfonso subdivided the property and sold portions to various parties: Spouses Reynaldo and Norma Dizon (2,043 sq.m.), Spouses Manolito and Juliana Esguerra (325 sq.m.), and Spouses Guillermo and Erlinda Manalili (1,000 sq.m.). The portion sold to Spouses Dizon was further subdivided and portions were sold to Crisanta Magtalas and to the children of Spouses Alfonso (Elita, Edwin, and Eiselle). Another portion was sold to Spouses Maximo and Priscilla Dinong, who then sold it to Leonilo Danilo Disor. Petitioners (the other children of Spouses Sulit and Julita Sulit) filed a Complaint for Annulment of Sale and/or Declaration of Nullity of Title, Reconveyance and Damages. They argued the 1979 sale was a mere accommodation for business capital and the property was held in trust, and the subsequent sales were unauthorized. In a prior related case (Civil Case No. 948-M-99), Branch 8 of the RTC of Malolos City had declared both the 1979 Deed of Sale and the counter Deed of Sale null and void for lack of consideration, a decision affirmed by the CA and which attained finality. The RTC, Branch 11, dismissed the complaint, primarily on grounds of prescription and that the subsequent purchasers were innocent purchasers for value. The CA affirmed the dismissal but on different grounds, ruling that while the action was imprescriptible because it was based on a void contract, recovery was barred because the property had passed to innocent purchasers for value and in good faith.

ISSUE

Whether the Court of Appeals committed reversible error in ruling that petitioners are barred from recovering the subject property on the ground that private respondents-purchasers were innocent purchasers for value and in good faith.

RULING

No, the Court of Appeals did not commit reversible error. The Supreme Court affirmed the CA’s decision. The Court held that an action for reconveyance based on a void contract is imprescriptible. However, the right to reconveyance is extinguished when the property has already been transferred to an innocent purchaser for value. The Court found that the subsequent purchasers (Spouses Dizon, Spouses Esguerra, Spouses Manalili, Crisanta Magtalas, Leonilo Danilo Disor, Eiselle Alfonso, Elita Alfonso, and Edwin Alfonso) were innocent purchasers for value and in good faith. They had no knowledge of any trust or flaw in the title of their vendors (Spouses Efren Sulit and Spouses Alfonso) and relied on the clean certificates of title issued under the Torrens system. The children of Spouses Alfonso were also considered purchasers in good faith as there was no proof they were minors or incapable of contracting at the time of sale. The Court emphasized the principle of indefeasibility of Torrens titles, which protects buyers who rely on what appears on the face of the title. Since the property had passed to innocent purchasers for value, petitioners could no longer recover it. The Court noted petitioners’ remedy lies in an action for damages against Spouses Efren Sulit and Spouses Alfonso, who were parties to the case.