Title
Alfredo Sulit, Julita Sulit, and the Heirs of Arsenio Sulit, Represented by Alfredo Sulit vs. Spouses Eugenio and Zenaida Alfonso, et al.
Case
G.R. No. 230599
Decision Date
Jan 20, 2021
Heirs of Spouses Sulit contested property sales by their siblings, alleging void transactions. SC ruled original sale void, nullified subsequent titles, and ordered reconveyance due to lack of good faith by buyers.
property law
conveyance
innocent purchaser

Case Summary (G.R. No. L-7817)

Factual Background: The Void Deeds and the Chain of Transfers

The subject property originally belonged to Spouses Arsenio and Julita Sulit and was later alleged to have been entrusted within the family for a business arrangement. Arsenio was deceased, and the spouses’ children included Alfredo, Rufino, Rodolfo, Juan, Efren (married to Eugenia, referred to as Spouses Efren Sulit), and Zenaida (married to Eugenio, referred to as Spouses Alfonso). Petitioners were the heirs of Arsenio, comprising Alfredo, Rufino, Rodolfo, and Juan.

On October 15, 1979, Spouses Sulit executed a Deed of Absolute Sale conveying the subject property to their two children, Efren and Zenaida, for a consideration of P3,000.00, after which Transfer Certificate of Title (TCT) No. T-257536 was issued in their names. Two months later, on December 6, 1979, Spouses Efren Sulit and Spouses Alfonso executed a counter Deed of Sale reconveying the property to their parents, Spouses Sulit. Despite this counter deed, the decision recounted that Spouses Efren Sulit and Spouses Alfonso proceeded to subdivide the property and sold portions to various buyers.

Among the subsequent sales were transfers in favor of Spouses Reynaldo P. Dizon and Norma Reyes (with TCT No. T-15277, later subdivided into Lots 1 to 6, and with an annotation regarding “Lot 2” in favor of Crisanta A. Magtalas), as well as sales to Spouses Manolito S. Esguerra and Juliana G. Esguerra (TCT No. T-15275) and to Spouses Guillermo Manalili and Erlinda Manalili (TCT No. T-15274). Further, portions of the subject property were sold by Spouses Efren Sulit and Spouses Alfonso to their children and relatives, including Elita S. Alfonso, Edwin S. Alfonso, Eiselle Alfonso, and others, and later transfers were made to Leonilo Danilo Disor after additional dealings mentioned in the records.

Petitioners filed a complaint for Annulment of Sale and/or Declaration of Nullity of Title, Reconveyance and Damages with prayer for preliminary injunction and/or temporary restraining order. They argued that the children had no authority to convey because they were allegedly holding the property in trust for Spouses Sulit and that the parents never truly divested ownership given the later counter deed meant to protect their interests. Petitioners impleaded the Register of Deeds of Bulacan as a public respondent.

Pre-Trial and Procedural Defenses

Private respondents moved to dismiss, invoking failure to comply with a condition precedent requiring earnest efforts to compromise because the case involved family members, a defect in the certification against forum shopping allegedly due to lack of signature by one of the plaintiffs, and prescription. Petitioners opposed, and the RTC granted the opposition in an order dated February 17, 2006.

Private respondents later filed an Answer with Counterclaim. They asserted that Spouses Sulit intended to donate the subject property to Efren and Zenaida with a condition for return if the sellers needed financial assistance, and that the Deed of Sale was executed for convenience in registration. They further claimed that the counter deed was executed without monetary consideration, and they invoked the validity of their subsequent sales as exercises of ownership rights made in good faith and for value. They also referenced a prior ruling in an unlawful detainer case in the MTC, Pulilan, Bulacan, which ordered Spouses Sulit to vacate a portion later owned by Eiselle.

During proceedings, the parties admitted that on September 17, 1999, Spouses Efren Sulit and Spouses Alfonso filed their own complaint against their parents for the declaration of nullity of the counter Deed of Sale dated December 6, 1979. This was dismissed by Branch 8, RTC, Malolos City, Bulacan in an Order dated August 5, 2002 in Civil Case No. 948-M-99. That court ruled that both the Deed of Sale dated October 15, 1979 and the counter Deed of Sale were invalid for lack of consideration, and the CA later affirmed that ruling with finality in CA-G.R. CV No. 77496 through a decision dated April 30, 2004.

Petitioners thus sought summary judgment on the basis of the established nullity of the key deeds. The RTC denied the motion for summary judgment on June 5, 2007, finding genuine factual issues that required evidentiary determination.

RTC Ruling: Dismissal for Lack of Merit on Prescription and Good Faith

On May 19, 2014, the RTC dismissed the complaint for lack of merit. It held that the action for reconveyance and annulment of title had already prescribed, since the complaint was filed on July 7, 2005, which was beyond ten years from the execution of the sale transactions and their subsequent registration leading to issuance of certificates of title.

The RTC noted the final August 5, 2002 RTC order and the April 30, 2004 CA decision in CA-G.R. CV No. 77496 declaring the initial Deed of Sale and the counter Deed invalid for lack of consideration. It further ruled that even assuming an implied trust arose from allegations of fraud, prescription still barred the action. In addition, the RTC invoked the Torrens system: private respondents-purchasers were not required to investigate beyond the title. The alleged trust was not annotated on the title of the subject property, and petitioners failed to prove purchasers’ knowledge thereof. With no allegation and proof of bad faith on the part of the private respondents-purchasers, the RTC applied the presumption that they were buyers in good faith.

Petitioners’ motion for reconsideration was denied in an order dated July 21, 2014.

CA Ruling: No Prescription but Protection of Innocent Purchasers

On appeal, the CA on December 28, 2016 affirmed the dismissal but found that the RTC had erred on prescription. The CA reasoned that the earlier RTC ruling in Civil Case No. 948-M-99 that declared the Deeds of Sale void for lack of consideration made the subject action based on a void contract, which it treated as imprescriptible. Yet the CA agreed with the RTC’s end result by ruling that the petitioners were nonetheless barred from recovering the property because it had passed to innocent purchasers for value and in good faith.

The CA emphasized that purchasers were not required to make further investigations beyond what the Torrens titles showed and that reliance on the face of the certificate of title is protected by the principles of indefeasibility and incontrovertibility under the Torrens system. It also extended the protection by applying the same doctrine to Eiselle, Elita, and Edwin, describing them as children of Spouses Alfonso and noting the absence of proof that they were not of age and thus had capacity to contract at the time of sale. The CA opined, however, that petitioners could still seek damages against Spouses Efren Sulit and Spouses Alfonso.

The CA’s dispositive portion, while affirming dismissal, expressly barred petitioners from recovering the lots now owned by the specified purchasers.

Issues Framed on Review

Petitioners elevated the matter by petition for review on certiorari and principally questioned whether the CA committed reversible error in holding that petitioners could not recover the subject property because the private respondents-purchasers were innocent purchasers for value and in good faith, and whether the CA erred in not awarding damages despite impleading Spouses Efren Sulit and Spouses Alfonso in the case below.

Petitioners argued that their continuous occupation and possession, including construction of a rest house, should have prompted the purchasers to investigate and thereby negate claims of good faith. They further contended that the CA’s reliance on a lone affidavit of Juliana Esguerra was self-serving and insufficient to establish good faith for all purchasers. Petitioners also attacked transfers to Eiselle, Elita, and Edwin as a strategy to deprive them of ownership and stressed that these transferees lacked capacity to contract because they were teenagers at the time. Finally, they maintained that requiring them to file a separate action for damages was unjust because Spouses Efren Sulit and Spouses Alfonso were already parties and allegedly liable.

Private respondents, in turn, maintained that petitioners failed to present evidence that the purchasers were not in good faith and for value, that the alleged trust was unannotated in titles and therefore not notice, that the nipa hut could not serve as notice absent proof of registration in the name of Spouses Sulit, and that the issuance of titles to later purchasers occurred before the earlier deeds were finally declared void.

Supreme Court Resolution: Directing Focus on Void Source and Purchaser Good Faith

The Court first resolved a procedural contention on the certification against forum shopping. It rejected the argument that the petition should be dismissed because the verification and certification were signed by Alfredo alone, without a showing he was authorized to represent co-petitioners. The Court held that substantial compliance existed because Alfredo shared a common interest in the disputed property with the other heirs and invoked a common cause of action within family relations.

On the merits, the Court recognized that whether a purchaser is innocent for value is generally a question of fact outside the Court’s usual power. However, it found that an inquiry into facts was imperative because the CA’s findings differed from the RTC’s approach, particularly where the RTC dismissed based on prescription while the CA found prescription inapplicable due to petitioners’ possession.

The Court then anchored the reasoning on the earlier final ruling in CA-G.R. CV No. 77496, which had declared the Deed of Sale dated October 15, 1979 and the counter Deed of Sale dated December 6, 1979 as void for lack of consideration. Relying on the principle nemo dat quod non habet, the Court held that Spouses Efren Sulit and Spouses Alfonso acquired no right over the subject property that

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