HEIRS OF SOFIA
QUIRONG, G.R. No. 173441
Represented by ROMEO P.
QUIRONG,
Petitioners, Present:
Carpio, J., Chairperson,
- versus - Leonardo-De Castro,
Brion,
Peralta,*
and
Abad, JJ.
DEVELOPMENT BANK OF
THE
Respondent.
December 3, 2009
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ABAD,
J.:
This
case is about the prescriptive period of an action for rescission of a contract
of sale where the buyer is evicted from the thing sold by a subsequent judicial
order in favor of a third party.
The
Facts and the Case
The
facts are not disputed. When the late Emilio
Dalope died, he left a 589-square meter untitled lot[1]
in Sta. Barbara, Pangasinan, to his wife,
Felisa Dalope (Felisa) and their nine children, one of whom was Rosa
Dalope-Funcion.[2] To enable Rosa and her husband Antonio
Funcion (the Funcions) get a loan from respondent Development Bank of the
Philippines (DBP), Felisa sold the whole lot to the Funcions. With the deed of sale in their favor and the tax
declaration transferred in their names, the Funcions mortgaged the lot with the
DBP.
On
February 12, 1979, after the Funcions failed to pay their loan, the DBP
foreclosed the mortgage on the lot and consolidated ownership in its name on
June 17, 1981.[3]
Four
years later or on September 20, 1983 the DBP conditionally sold the lot to Sofia
Quirong[4]
for the price of P78,000.00. In
their contract of sale, Sofia Quirong waived any warranty against eviction. The contract provided that the DBP did not
guarantee possession of the property and that it would not be liable for any
lien or encumbrance on the same. Quirong
gave a down payment of P14,000.00.
Two
months after that sale or on November 28, 1983 Felisa and her eight children (collectively,
the Dalopes)[5] filed
an action for partition and declaration of nullity of documents with damages against
the DBP and the Funcions before the Regional Trial Court (RTC) of Dagupan City,
Branch 42, in Civil Case D-7159.
On
December 27, 1984, notwithstanding the suit, the DBP executed a deed of
absolute sale of the subject lot in Sofia Quirong’s favor. The deed of sale carried substantially the same
waiver of warranty against eviction and of any adverse lien or
encumbrance.
On
May 11, 1985, Sofia Quirong having since died, her heirs (petitioner Quirong
heirs) filed an answer in intervention[6]
in Civil Case D-7159 in which they asked the RTC to award the lot to them and,
should it instead be given to the Dalopes, to allow the Quirong heirs to recover
the lot’s value from the DBP. But,
because the heirs failed to file a formal offer of evidence, the trial court
did not rule on the merits of their claim to the lot and, alternatively, to
relief from the DBP.[7]
On December 16, 1992 the RTC rendered
a decision, declaring the DBP’s sale to Sofia Quirong valid only with respect
to the shares of Felisa and Rosa Funcion in the property. It declared Felisa’s sale to the Funcions, the
latter’s mortgage to the DBP, and the latter’s sale to Sofia Quirong void insofar
as they prejudiced the shares of the eight other children of Emilio and Felisa who
were each entitled to a tenth share in the subject lot.
The
DBP received a copy of the decision on January 13, 1993 and, therefore, it had
until January 28, 1993 within which to file a motion for its reconsideration or
a notice of appeal from it. But the DBP failed
to appeal supposedly because of excusable negligence and the withdrawal of its previous
counsel of record.[8]
When
the RTC judgment became final and the court issued a writ of execution, the DBP
resisted the writ by motion to quash, claiming that the decision could not be
enforced because it failed to state by metes and bounds the particular portions
of the lot that would be assigned to the different parties in the case. The RTC denied the DBP’s motion, prompting
the latter to seek recourse by special civil action of certiorari directly with this Court in G.R. 116575, Development Bank of the
On June 10, 1998 the Quirong heirs filed
the present action[10]
against the DBP before the RTC of Dagupan City, Branch 44, in Civil Case
CV-98-02399-D for rescission of the contract of sale between Sofia Quirong,
their predecessor, and the DBP and praying for the reimbursement of the price of
P78,000.00 that she paid the bank plus damages. The heirs alleged that they were entitled to
the rescission of the sale because the decision in Civil Case D-7159 stripped them
of nearly the whole of the lot that Sofia Quirong, their predecessor, bought
from the DBP. The DBP filed a motion to
dismiss the action on ground of prescription and res judicata but the
RTC denied their motion.
On June 14, 2004, after hearing the
case, the RTC rendered a decision,[11]
rescinding the sale between Sofia Quirong and the DBP and ordering the latter to
return to the Quirong heirs the P78,000.00 Sofia Quirong paid the bank.[12] On appeal by the DBP, the Court of Appeals (CA)
reversed the RTC decision and dismissed the heirs’ action on the ground of
prescription. The CA concluded that, reckoned
from the finality of the December 16, 1992 decision in Civil Case D-7159, the
complaint filed on June 10, 1998 was already barred by the four-year
prescriptive period under Article 1389 of the Civil Code.[13] The Quirong heirs filed a motion for
reconsideration of the decision but the appellate court denied it,[14]
thus, this petition.
The
Issues Presented
The
issues presented in this case are:
1. Whether or not the Quirong heirs’ action
for rescission of respondent DBP’s sale of the subject property to Sofia
Quirong was already barred by prescription; and
2. In the negative, whether or not the heirs
of Quirong were entitled to the rescission of the DBP’s sale of the subject lot
to the late Sofia Quirong as a consequence of her heirs having been evicted
from it.
The
Court’s Rulings
The
CA held that the Quirong heirs’ action for rescission of the sale between DBP
and their predecessor, Sofia Quirong, is barred by prescription reckoned from
the date of finality of the December 16, 1992 RTC decision in Civil Case D-7159
and applying the prescriptive period of four years set by Article 1389 of the
Civil Code.
Unfortunately,
the CA did not state in its decision the date when the RTC decision in Civil
Case D-7159 became final and executory, which decision resulted in the Quirong heirs’
loss of 80% of the lot that the DBP sold to Sofia Quirong. Petitioner heirs claim that the prescriptive
period should be reckoned from January 17, 1995, the date this Court’s
resolution in G.R. 116575 became final and executory.[15]
But
the incident before this Court in G.R. 116575 did not deal with the merit of
the RTC decision in Civil Case D-7159.
That decision became final and executory on January 28, 1993 when the DBP
failed to appeal from it within the time set for such appeal. The incident before this Court in G.R. 116575
involved the issuance of the writ of execution in that case. The DBP contested such issuance supposedly
because the dispositive portion of the decision failed to specify details that
were needed for its implementation. Since
this incident did not affect the finality of the decision in Civil Case D-7159, the prescriptive period remained to be
reckoned from January 28, 1993, the date of such finality.
The
next question that needs to be resolved is the applicable period of
prescription. The DBP claims that it
should be four years as provided under Article 1389 of the Civil Code.[16]
Article 1389 provides that “the action
to claim rescission must be commenced within four years.” The Quirong heirs, on the other hand, claim
that it should be 10 years as provided under Article 1144 which states that
actions “upon a written contract” must be brought “within 10 years from the
date the right of action accrues.”
Now,
was the action of the Quirong heirs “for rescission” or “upon a written
contract”? There is no question that
their action was for rescission, since their complaint in Civil Case
CV-98-02399-D asked for the rescission of the contract of sale between Sofia
Quirong, their predecessor, and the DBP and the reimbursement of the price of P78,000.00
that Sofia Quirong paid the bank plus damages.
The prescriptive period for rescission is four years.
But
it is not that simple. The remedy of “rescission”
is not confined to the rescissible contracts enumerated under Article 1381.[17] Article 1191 of the Civil Code gives the
injured party in reciprocal obligations, such as what contracts are about, the
option to choose between fulfillment and “rescission.” Arturo M. Tolentino, a well-known authority
in civil law, is quick to note, however, that the equivalent of Article 1191 in
the old code actually uses the term “resolution” rather than the present
“rescission.”[18] The calibrated meanings of these terms are
distinct.
“Rescission”
is a subsidiary action based on injury to the plaintiff’s economic interests as
described in Articles 1380 and 1381. “Resolution,”
the action referred to in Article 1191, on the other hand, is based on the
defendant’s breach of faith, a violation of the reciprocity between the
parties. As an action based on the
binding force of a written contract, therefore, rescission (resolution) under Article
1191 prescribes in 10 years. Ten years
is the period of prescription of actions based on a written contract under Article
1144.
The
distinction makes sense. Article 1191
gives the injured party an option to choose between, first, fulfillment of
the contract and, second, its rescission. An action to enforce a written contract
(fulfillment) is definitely an “action upon a written contract,” which prescribes
in 10 years (Article 1144). It will not be
logical to make the remedy of fulfillment prescribe in 10 years while the
alternative remedy of rescission (or resolution) is made to prescribe after
only four years as provided in Article 1389 when the injury from which the two
kinds of actions derive is the same.
Here,
the Quirong heirs alleged in their complaint that they were entitled to the
rescission of the contract of sale of the lot between the DBP and Sofia Quirong
because the decision in Civil Case D-7159 deprived her heirs of nearly the
whole of that lot. But what was the
status of that contract at the time of the filing of the action for
rescission? Apparently, that contract of
sale had already been fully performed when Sofia Quirong paid the full price
for the lot and when, in exchange, the DBP executed the deed of absolute sale
in her favor. There was a turnover of
control of the property from DBP to Sofia Quirong since she assumed under their
contract, “the ejectment of squatters and/or occupants” on the lot, at her own
expense.[19]
Actually,
the cause of action of the Quirong heirs stems from their having been ousted by
final judgment from the ownership of the lot that the DBP sold to Sofia
Quirong, their predecessor, in violation of the warranty against eviction that
comes with every sale of property or thing.
Article 1548 of the Civil Code provides:
Article
1548. Eviction shall take place whenever
by a final judgment based on a right prior to the sale or an act imputable to
the vendor, the vendee is deprived of the whole or of a part of thing
purchased.
x
x x x
With
the loss of 80% of the subject lot to the Dalopes by reason of the judgment of
the RTC in Civil Case D-7159, the Quirong heirs had the right to file an action
for rescission against the DBP pursuant to the provision of Article 1556 of the
Civil Code which provides:
Article
1556. Should the vendee lose, by reason
of the eviction, a part of the thing sold of such importance, in relation to
the whole, that he would not have bought it without said part, he may demand
the rescission of the contract; but with the obligation to return the thing
without other encumbrances than those which it had when he acquired it. x x x
And
that action for rescission, which is based on a subsequent economic loss
suffered by the buyer, was precisely the action that the Quirong heirs took against
the DBP. Consequently, it prescribed as Article
1389 provides in four years from the time the action accrued. Since it accrued on January 28, 1993 when the
decision in Civil Case D-7159 became final and executory and ousted the heirs
from a substantial portion of the lot, the latter had only until January 28,
1997 within which to file their action for rescission. Given that they filed their action on June
10, 1998, they did so beyond the four-year period.
With
the conclusion that the Court has reached respecting the first issue presented
in this case, it would serve no useful purpose for it to further consider the
issue of whether or not the heirs of Quirong would have been entitled to the
rescission of the DBP’s sale of the subject lot to Sofia Quirong as a
consequence of her heirs having been evicted from it. As the Court has ruled above, their action
was barred by prescription. The CA acted
correctly in reversing the RTC decision and dismissing their action.
Parenthetically,
the Quirong heirs were allowed by the RTC to intervene in the original action
for annulment of sale in Civil Case D-7159 that the Dalopes filed against the
DBP and the Funcions. Not only did the
heirs intervene in defense of the sale, they likewise filed a cross claim
against the DBP. And they were
apparently heard on their defense and cross claim but the RTC did not
adjudicate their claim for the reason that they failed to make a formal offer
of their documentary exhibits. Yet, they
did not appeal from this omission or from the judgment of the RTC, annulling
the DBP’s sale of the subject lot to Sofia Quirong. This point is of course entirely academic but
it shows that the Quirong heirs have themselves to blame for the loss of
whatever right they may have in the case.
WHEREFORE, the Court DENIES
the petition and AFFIRMS the November
30, 2005 decision of the Court of Appeals in CA-G.R. CV 83897.
SO ORDERED.
ROBERTO A. ABAD
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate
Justice
TERESITA J. LEONARDO-DE
CASTRO ARTURO D. BRION
Associate Justice Associate Justice
DIOSDADO M. PERALTA
Associate
Justice
ATTESTATION
I
attest that the conclusions in the above decision were reached in consultation
before the case was assigned to the writer of the opinion of the Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Pursuant
to Section 13, Article VIII of the Constitution and the Division Chairperson’s
Attestation, it is hereby certified that the conclusions in the above Decision
were reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
REYNATO
S. PUNO
Chief Justice
*
Designated as additional member
of the Second Division per raffle dated September 29, 2009.
[1] Unregistered lot previously declared for
taxation purposes in the name of spouses Emilio and Felisa Dalope, located at
Tuliao, Sta. Barbara, Pangasinan and covered by Tax Declaration No. 720.
[2] The heirs are in possession of the land. Standing on it are two houses, one bungalow
owned by Felisa and a two-storey house owned by the Funcion spouses.
[3] CA rollo,
p. 25.
[4]
Now substituted by the petitioner Heirs of Sofia Quirong.
[5] Lydia, Jose, Imelda, Cesar, Fredeline, Carlos,
Emilio, and Cipriano, the latter also known as Sofronio and represented by his
heirs, Elena Andaca, Alma, Noemi, Gaile, and Shiela, all surnamed Dalope.
[6] Rollo,
p. 182.
[7]
[8]
Petition in G.R. No. 116575, rollo,
p. 105.
[9] Rollo,
p. 114.
[10] Complaint, id. at 57.
[11]
[12] WHEREFORE, the
Contract of Sale involving the parcel of land situated in Tuliao, Sta. Barbara,
Pangasinan, x x x is ordered rescinded and defendant is ordered to reimburse to
plaintiffs the sum of Seventy Eight Thousand Pesos (P78,000.00) plus
interests thereof at bank rate from 1983 until it is returned to the
plaintiffs.
Furnish
copies of this decision to Atty. Aurora Esguerra Valle and Atty. Rolando D.
Mendoza.
SO ORDERED. (Rollo, p. 86)
[13] November 30, 2005 Decision, id. at 52.
[14] June 14, 2006 Resolution, id. at 56.
[15]
[16] Art.
1389. The action to
claim rescission must be commenced within four years.
For persons under guardianship and for absentees, the period of four years shall not begin until the termination of the former’s incapacity, or until the domicile of the latter is known.
[17] Article 1381. The following contracts are rescissible: (1)
Those which are entered into by guardians whenever the wards whom they
represent suffer lesion by more than one-fourth of the value of the things
which are the object thereof; (2) Those agreed upon in representation of
absentees, if the latter suffer the lesion stated in the preceding number; (3)
Those undertaken in fraud of creditors when the latter cannot in any other
manner collect the claims due them; (4) Those which refer to things under
litigation if they have been entered into by the defendant without the
knowledge and approval of the litigants or of competent judicial authority; (5)
All other contracts specially declared by law to be subject to rescission.
[18]
Tolentino, Civil Code of the
[19]
DBP’s Memorandum, citing par. 15, No. 3 of Deed of Conditional Sale, rollo, p. 245.