Case Digest (G.R. No. 126000)
Facts:
In 1965 Metropolitan Waterworks and Sewerage System (MWSS) leased about 128 hectares to Capitol Hills Golf & Country Club, Inc. (CHGCCI). Pursuant to executive instruction, MWSS approved sale resolutions in 1983, sold the land to Silhouette Trading Corporation (SILHOUETTE) by agreements dated May 11 and August 11, 1983, and SILHOUETTE sold part of the property to Ayala Corporation / Ayala Land, Inc. (AYALA) in 1984, which developed Ayala Heights.
MWSS filed suit on March 26, 1993 to annul the MWSS‑SILHOUETTE sale and subsequent conveyances and to recover the property; the trial court dismissed the complaint for prescription, laches, estoppel/ratification and non‑joinder of indispensable parties, the Court of Appeals affirmed the dismissal as to AYALA, and MWSS’s consolidated appeals to the Supreme Court were denied.
Issues:
- Is MWSS’s action barred by prescription?
- Is MWSS’s claim barred by laches despite alleged imprescriptibility?
- Did MWSS ratify the sale so as to preclude annulment?
- Does the failure to implead present lot‑owners render the action subject to dismissal for non‑joinder of indispensable parties?
Ruling:
The Court DENIED the consolidated petitions and AFFIRMED the dismissal of MWSS’s complaint as to AYALA. The Court held that the challenged contracts were at most voidable, subject to the four‑year prescriptive period, and that MWSS’s delay and conduct established laches and ratification; the absence of present lot‑owners rendered the suit defective for non‑joinder of indispensable parties.
Ratio:
The Court found the three requisites of contract present, so the agreements were voidable not void ab initio; consequently Art. 1391, New Civil Code applied and the four‑year period began upon discovery or when the defect ceased (the deposing of Marcos or earlier constructive notice by registration), making the 1993 suit belated. Independently, MWSS’s prolonged delay, its acceptance of downpayment and letters of credit, and Board Resolution No. 36‑83 manifested express and implied ratification, satisfying the elements of laches and causing prejudice to vendees; moreover, many lot‑owners affected by reconveyance were indispensable parties whose absence required dismissal.
Doctrine:
- A contract whose consent is vitiated is voidable, not void ab initio, and is subject to the prescriptive rules for annulment.
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