G.R. No. 248974 - Heirs of Tulauan vs. Mateo

Teodoro Tulauan was the absolute, registered owner of the subject property in Santiago (now Santiago City) originally covered by OCT No. P-1080.
In the early 1950s, Teodoro left Santiago for Tuguegarao due to security concerns but intermittently visited and paid real estate taxes.

In 1953, the Registry of Deeds of Isabela issued TCT No. T-4232 in the name of Manuel Mateo, transferring the property from Teodoro Tulauan.
The property was subdivided into four lots (Lot Nos. 938-A-1 to 938-A-4); Lot No. 938-A-4 was further subdivided into four additional lots (Lot Nos. 938-A-4-A to 938-A-4-D).
Manuel subsequently sold several of these lots including Lot Nos. 938-A-1, 938-A-2, 938-A-3, 938-A-4-B, and 938-A-4-C to various buyers.
In 1979, the Registry issued TCT No. 118858 for Lot No. 938-A-4-D in the name of Magdalena Mateo Lorenzo.

The Heirs of Teodoro Tulauan later discovered that the title registered in Teodoro’s name was cancelled through a deed of conveyance whose copy was destroyed in a fire at the Registry of Deeds.
Further verification with the Bureau of Lands revealed that, in 1981, Lope H. Soriano presented a deed of conveyance transferring the subject property to his name.
Based on these findings, the Heirs, represented by Tito Tulauan, filed a complaint for annulment of documents, reconveyance, and damages asserting that the TCTs under Manuel and Magdalena were based on an inexistent document.

The Regional Trial Court (RTC) dismissed the complaint in its Order dated September 16, 2014 on several grounds: prescription, laches, failure to state a cause of action, and lack of merit.
The RTC highlighted that:

An action for reconveyance based on fraud prescribes in four years (or ten years if based on an implied or constructive trust) and the claim was filed more than six decades after the title registration.
The Heirs’ inaction over a prolonged period amounted to laches.
The property had already passed to innocent purchasers for value.

The RTC’s dismissal was affirmed by the Court of Appeals (CA) in its Decision dated July 31, 2018 and a subsequent Resolution dated July 15, 2019.
The Heirs appealed based on the contention that their action for reconveyance was not grounded on fraud but on the inexistence of a valid contract, rendering the action imprescriptible under Article 1410 of the New Civil Code.

The complaint alleged the non-existence of a deed of conveyance, not fraud per se, and that an action based on a void or inexistent contract does not prescribe.
They were prevented from pursuing their claim due to security concerns, and thus laches should not apply.
The dismissal on the innocent purchaser ground was premature as it was evidentiary in nature.

Respondents (Manuel Mateo, Magdalena Mateo Lorenzo, and Communities Isabela, Inc.) maintained that the cause of action was barred by the statutes of limitation, laches was evident from the Heirs’ inaction, and that the property had been acquired by innocent purchasers for value.

Whether the Heirs’ cause of action for reconveyance is barred by prescription, given that the title registration and subsequent transfers occurred several decades ago.
Whether the argument that an action for reconveyance, founded on an inexistent contract, is imprescriptible under Article 1410 of the New Civil Code is valid.

Whether the Heirs are guilty of laches for failing to assert their rights over an inordinate period of time.
Whether the dismissal based on laches, derived solely from the pleadings without a full fact-finding trial, was appropriate.

Whether the dismissal of the complaint on the ground that the subject property had already passed to innocent purchasers for value is premature.
Whether the factual issues pertaining to the status of the purchasers, which require evidentiary proof, were properly resolved without a full trial.