In Bohol Resort Development, Inc. v. Doloreich Dumaluan, the Supreme Court held that the issue of prescription in an action for reconveyance of property cannot be resolved without a full trial on the merits when the validity of the underlying sale is in question. The Court emphasized that determining whether the action has prescribed depends on factual findings that need to be thoroughly examined during trial. This ruling underscores the importance of a comprehensive assessment of evidence before deciding on the timeliness of property disputes, ensuring fairness and accuracy in land ownership claims.

From Lorejos to Dumaluan: When Does the Clock Start Ticking on Land Disputes?

The case originated from a complaint filed by Doloreich Dumaluan seeking to nullify Transfer Certificate Title (TCT) No. 29414 held by Bohol Resort Development, Inc. (BRDI) and to reconvey the land to him. Doloreich claimed ownership of a parcel of land that included Lot 3-B, which BRDI had acquired. His claim rested on the argument that the sale of the land to BRDI’s predecessor-in-interest, Paulino Franco, by the Lorejos was void. This claim of nullity stemmed from Doloreich’s assertion that the Lorejos had no right to sell the land.

BRDI countered that it was an innocent purchaser for value, having bought the property from the Spouses Uytengsu, who in turn had purchased it from Franco. BRDI also argued that the Lorejos, as heirs of the original owner, Valentin Dumaluan, had the right to sell their share of the land. The Regional Trial Court (RTC) initially dismissed Doloreich’s complaint for lack of cause of action, later modifying the dismissal to prescription. The Court of Appeals (CA), however, reversed the RTC’s decision and remanded the case for trial, leading to BRDI’s petition before the Supreme Court.

The central issue before the Supreme Court was whether the CA correctly remanded the case to the RTC for trial without resolving the issue of prescription. The Court affirmed the CA’s decision, emphasizing that the issue of prescription could not be resolved without a full trial due to the factual disputes surrounding the validity of the sale between the Lorejos and Franco. According to the Court, affirmative defenses must be conclusively proven, especially when factual questions remain.

An affirmative defense is an allegation of a new matter that, while hypothetically admitting the material allegations in the claimant’s pleading, would prevent recovery by the claimant. These defenses include statute of limitations, payment, illegality, and others. The 2019 Amendments to the Rules of Court stipulate that when prescription is raised as an affirmative defense, the court may conduct a summary hearing. However, the Supreme Court found that a summary hearing was insufficient in this case due to the complexity of the factual issues.

The Court emphasized that a trial was necessary to determine the nature of Doloreich’s action, which would then dictate the applicable prescriptive period. The Court identified that actions for reconveyance may be based on fraud, implied or constructive trust, express trust, or a void contract.

Where an action is based on fraud or a trust, the prescriptive period for the action is 10 years from the erroneous registration of the property. On the other hand, if the action for reconveyance is based on the nullity of the deed of conveyance, the action is imprescriptible.

In cases where the reconveyance action stems from a void contract, the action is imprescriptible, meaning it has no statute of limitations.

The allegations in the complaint determine the nature of the action. Here, Doloreich sought reconveyance based on the claim that the sale between the Lorejos and Franco was void. He further alleged that Franco committed fraud in obtaining his Original Certificate of Title (OCT). The Supreme Court concurred with the CA’s characterization of the action as one for reconveyance based on the alleged nullity of the Deed of Absolute Sale. This determination, however, hinged on resolving factual issues, such as whether the Lorejos had the right to sell the property and whether the property sold exceeded what was covered by Tax Declaration No. 33-03-0218.

The Court also highlighted BRDI’s defense as an innocent purchaser for value, a status that requires factual determination through trial. To be considered an innocent purchaser for value, the buyer must have purchased the property in good faith, without notice of any defect in the seller’s title. Furthermore, BRDI needed to prove that it had paid a full and fair price for the property. Such determination is relevant only insofar as it constitutes one of BRDI’s defenses and must be proven during trial.

The Supreme Court cited Gatmaytan v. Misibis Land, Inc. as guidance, where the Court ruled that if the petitioner made factual allegations pertaining to the nullity of the underlying sale, this issue should be resolved first in a trial on the merits. In the present case, the Court stated that if the RTC, after trial, determines that the underlying Deed of Absolute Sale is indeed void, then the action for reconveyance is classified as imprescriptible and Doloreich’s claim cannot be said to be time-barred.

The Court also noted Doloreich’s allegation of extrinsic fraud but pointed out that he did not make these allegations with sufficient particularity, as required by the Rules of Court. Additionally, Doloreich had not yet presented evidence supporting this fraud claim during the hearing for injunctive relief. Because Doloreich may still present evidence to support its claim, a trial is required for the RTC to assess which of Doloreich’s assertions will be proved. In conclusion, the Supreme Court emphasized the necessity of a trial to resolve the factual disputes and determine the applicable prescriptive period for Doloreich’s action for reconveyance.

FAQs

What was the key issue in this case?	The key issue was whether the Court of Appeals correctly remanded the case to the Regional Trial Court for trial on the merits without resolving the question of whether Doloreich’s cause of action had prescribed.
What is an action for reconveyance?	An action for reconveyance is a legal remedy for a landowner to recover property wrongfully registered in another person’s name, provided the property has not been transferred to an innocent purchaser for value. The action aims to prove that the registered owner is not the actual owner.
What are the grounds for an action for reconveyance?	An action for reconveyance may be based on fraud, an implied or constructive trust, an express trust, or a void contract. The basis for the action determines the prescriptive period, or whether there is a prescriptive period at all.
What is the prescriptive period for an action for reconveyance based on fraud?	The prescriptive period for an action for reconveyance based on fraud is ten years from the erroneous registration of the property. This means the lawsuit must be filed within ten years of the fraudulent registration.
What is the prescriptive period for an action for reconveyance based on a void contract?	If the action for reconveyance is based on the nullity of the deed of conveyance (a void contract), the action is imprescriptible. This means there is no time limit for filing the action to recover the property.
What is an affirmative defense?	An affirmative defense is a new matter alleged in a defendant’s answer that, even if the plaintiff’s allegations are true, would prevent the plaintiff from winning the case. Examples include prescription, payment, and fraud.
What is an innocent purchaser for value?	An innocent purchaser for value is someone who buys property in good faith, without knowledge of any defects or problems with the seller’s title, and pays a fair price for it. This status provides certain protections under the law.
Why was a trial necessary in this case?	A trial was necessary to resolve factual disputes regarding the validity of the sale between the Lorejos and Franco. The court needed to determine if the Lorejos had the right to sell the property, and whether Doloreich’s allegations of fraud and a void contract were valid.

The Supreme Court’s decision in Bohol Resort Development, Inc. v. Doloreich Dumaluan clarifies the importance of conducting a full trial to resolve factual disputes before determining whether an action for reconveyance has prescribed. This ruling ensures that property rights are thoroughly examined and that decisions are based on a complete understanding of the facts.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Bohol Resort Development, Inc. v. Doloreich Dumaluan, G.R. No. 261292, February 15, 2023