G.R. No. 203241 - Rizal Commercial Banking Corp. vs. Serra

On 20 May 1975, Respondent Federico A. Serra, owner of a 374‑square-meter parcel along Quezon Street, Masbate, entered into a Contract of Lease with Option to Buy with petitioner Rizal Commercial Banking Corporation (RCBC).
Under the contract, RCBC was given a 25‑year lease and, within 10 years from the signing, the option to purchase the land and its improvements.

On 4 September 1984, RCBC notified Serra of its decision to exercise the option to buy; however, Serra refused to sell.
Consequently, on 14 March 1985, RCBC filed a Complaint for Specific Performance and Damages in the RTC Makati, demanding Serra’s compliance with the lease with option to buy.
Initially, the RTC Makati dismissed RCBC’s complaint but later, on 5 January 1989, reversed its decision, ordering Serra to execute and deliver the proper deed of sale in favor of RCBC.
Serra appealed the decision to the Court of Appeals (CA), and meanwhile, on 18 May 1989, he transferred the property by way of donation to his mother, Leonida Ablao.

On 20 April 1992, Ablao sold the property to Hermanito Liok, and a new land title was subsequently issued in favor of Liok.
RCBC initiated a separate annulment case with a Complaint for Nullification of Deed of Donation and Deed of Sale with Reconveyance and Damages, naming Liok, Ablao, and Serra as defendants, before the RTC of Masbate City.
The CA and later the Supreme Court affirmed the Specific Performance case; on 4 January 1994, the Supreme Court declared the Contract of Lease with Option to Buy valid, effective, and enforceable.
The decision in the Specific Performance case became final and executory on 15 April 1994.

On 22 October 2001, the RTC Masbate ruled in favor of RCBC by nullifying both the deed of donation and the subsequent sale.
The CA, in its Decision dated 28 September 2007, affirmed that the donation was simulated and designed solely to evade Serra’s contractual obligation toward RCBC, rendering both the donation and the sale null and void.
As a result, separate petitions for review and certiorari were filed by Liok (G.R. No. 182478) and by Serra and Ablao (G.R. No. 182664).

On 25 August 2011, RCBC moved for execution of the final decision in the Specific Performance case ordering Serra to execute a deed of sale.
RCBC argued that its execution was unlawfully prevented due to the fraudulent transfers and the pendency of the annulment case, claiming that the execution period was suspended.
On 16 February 2012, the RTC Makati denied RCBC’s motion for execution, opining that RCBC should have secured the deed of sale with registration at the Registry of Deeds.
RCBC's motion for reconsideration was similarly denied on 26 July 2012 by the RTC Makati.
Subsequently, RCBC filed a petition for review on certiorari challenging the RTC's orders, which also included a request for the issuance of a writ of preliminary injunction and/or a temporary restraining order.

On 3 December 2012, this Court granted a Temporary Restraining Order (TRO) against the implementation of the challenged RTC orders upon the filing of a bond.
The issue central to the petition was whether RCBC was barred from enforcing the January 1989 decision due to the lapse of the five-year period for execution by motion, considering that the delay was caused by actions taken by Serra.

Whether the RTC’s ruling barring RCBC from executing the 5 January 1989 decision through a motion, due to the lapse of the five-year period, is correct.

Whether the delay in RCBC’s enforcement action, caused by the pendency of the annulment proceedings and the fraudulent transfers effected by Serra, effectively suspended the running of the five-year period under which execution by motion is normally barred.