Santos vs. Heirs of Lustre

No forum shopping or litis pendentia exists absent substantial identity of parties, even where causes of action are identical, when the plaintiff in the first co-owned-property suit seeks reconveyance to herself alone in repudiation of the co-ownership while plaintiffs in the second suit sue for reinstatement of title for the benefit of all co-owners; and an action for reconveyance grounded on a fictitious deed, constituting an action for declaration of nullity or enforcement of an implied trust by a possessor, does not prescribe and cannot be defeated by laches.

Dominga Lustre, who died on October 15, 1989, owned a 390-square-meter residential lot in San Antonio, Nueva Ecija covered by Transfer Certificate of Title No. NT-50384. On September 20, 1974, she mortgaged the lot to spouses Sofronio and Natividad Santos for ₱38,000.00. On May 16, 1976, she allegedly sold the property to Natividad M. Santos for ₱15,000.00 through a Deed of Absolute Sale. The mortgage appears to have been canceled on March 20, 1976, and both the cancellation and the sale were inscribed at the back of TCT No. NT-50384 on April 17, 1984. As a result, TCT No. NT-50384 was canceled and TCT No. NT-183029 was issued in the name of the spouses Santos, who thereafter executed a Deed of Sale transferring the property to their son Froilan M. Santos, leading to cancellation of TCT No. NT-183029 and issuance of TCT No. 193973 in Froilan's name.

On April 14, 1994, Cecilia Macaspac and Tarcisio Maniquiz, claiming as legitimate children of Dominga Lustre with Eusebio Maniquiz as her spouse, filed with the Regional Trial Court of Gapan a Complaint for Declaration of Inexistence of Contract, Annulment of Title, Reconveyance and Damages against Froilan M. Santos, docketed as Civil Case No. 1330. According to the Amended Complaint, the sale to Natividad Santos was simulated, spurious or fake, discovered only when Froilan filed an ejectment suit against them and through fraud succeeded in transferring the property. On the mistaken belief that the sale occurred on April 17, 1984, they prayed for declaration of inexistence of that sale and subsequent transfers, cancellation of TCT No. NT-193973, reconveyance to plaintiffs, plus ₱20,000.00 each as attorney's fees, moral damages, litigation expenses and exemplary damages.

Thereafter, while Civil Case No. 1330 was still pending after referral to the municipal trial court for jurisdictional reasons, Dominga Lustre's other heirs Eusebio Maniquiz, Teresita Burgos, Tarcisio Maniquiz, Florita M. Reyes and Lermie Maniquiz filed on May 14, 1999 a Complaint for Annulment of Transfer Certificate of Title and Deed of Absolute Sale, docketed as Civil Case No. 2115. Cecilia Macaspac, plaintiff in the first case, was impleaded as defendant for refusing to join as plaintiff. Respondents alleged that the Santos spouses simulated the May 16, 1976 Deed by forging Dominga's signature, simulated another Deed to Froilan resulting in TCT No. 193973 used in the ejectment suit, and that R Transport Corporation's claim of purchase from Froilan was unproven; having resided on the property since birth in a house built by ancestors, they prayed for nullification of the deeds and succeeding titles, reinstatement of TCT No. NT-50384 in Dominga Lustre's name, and joint and several moral damages of ₱200,000.00, exemplary damages of ₱100,000.00, attorney's fees of ₱50,000.00 plus costs.

Petitioners moved to dismiss Civil Case No. 2115 for prescription and laches, supplemented on litis pendentia, which the trial court denied. The Court of Appeals sustained the denial, finding no identity of parties and differences in reliefs, and characterizing the action as one for declaration of inexistence which does not prescribe without unreasonable delay for laches.

• Forum Shopping and Litis Pendentia: Petitioner argued that all plaintiffs in both cases are heirs of Dominga Lustre while defendants are past and present holders of the titles, so identity of parties exists despite Cecilia Macaspac appearing as plaintiff in the first case and defendant in the second and despite additional defendants in the second case.
• Indispensable Parties and Res Judicata: Petitioner maintained that Cecilia Macaspac is an indispensable party in both cases, that additional parties do not prevent res judicata, and that under Juan vs Go Cotay identity remains although one party not joined in the former action was not a necessary party in either action.
• Prescription and Laches: Petitioner argued that respondents’ right of action for annulment of the Deed of Sale and TCT Nos. 183029 and 193973 had long prescribed and was barred by laches.

• Buyers in Good Faith: Respondent countered that the transferees of the property could not be considered as buyers in good faith, respondents having resided on the property since birth in a house built by ancestors.
• Indispensable Parties: Respondent argued that the additional plaintiffs in Civil Case No. 2115 are indispensable parties, being co-owners of the property, in opposition to petitioners’ reliance on lack of necessity of joinder.

• Forum Shopping and Litis Pendentia: Whether the RTC committed grave abuse of discretion in not dismissing Civil Case No. 2115 on the ground of forum shopping or litis pendentia.
• Prescription and Laches: Whether the RTC committed grave abuse of discretion in not dismissing Civil Case No. 2115 on the ground of prescription or laches.

• Forum Shopping and Litis Pendentia: No. Despite identity of causes of action, substantial identity of parties was absent because the first plaintiff repudiated the co-ownership while the second plaintiffs sued for its benefit.
• Prescription and Laches: No. Reconveyance grounded on a fictitious deed is virtually a declaration of nullity which does not prescribe, and as an implied-trust action by possessors it is imprescriptible and immune to laches.

• Forum Shopping and Litis Pendentia: Forum shopping exists where litis pendentia elements concur or final judgment in one case amounts to res judicata in the other, requiring identity of parties, subject matter and causes of action. Identity of causes of action was conceded, since the same evidence on the same series of transactions would sustain both actions for cancellation and recovery, even with different reliefs and dates pleaded. Substantial, not absolute, identity suffices, reversal of positions does not negate it, and community of interest suffices. Nevertheless, no community of interest existed: Cecilia Macaspac in Civil Case No. 1330 prayed reconveyance to herself, a repudiation negating privity or suit for the co-ownership, whereas respondents in Civil Case No. 2115 prayed reinstatement of title in Dominga Lustre's name for all heirs. Characterization as indispensable or necessary was immaterial to commonality, bearing only on validity of any judgment in the first case.
• Prescription and Laches: An action for reconveyance on the ground that title was obtained by fictitious deed is virtually an action for declaration of nullity, which does not prescribe. By operation of law a fraudulent acquirer becomes trustee of an implied trust, whose reconveyance action prescribes in ten years only if reconveyance is actually needed, i.e., plaintiff is out of possession; if plaintiff remains in possession, the action is in nature a suit for quieting of title and imprescriptible. Laches, being equitable, applies only absent statutory law and never against an imprescriptible legal right. Whether any transferee was an innocent purchaser for value must be threshed out in the main case, not on dismissal.

• Forum shopping — Forum shopping exists when the elements of litis pendentia are present or when a final judgment in one case will amount to res judicata in the other, requiring identity of parties, subject matter and causes of action. Applied to deny dismissal where, despite identical causes of action and subject property, the party element failed.
• Substantial identity of parties — Only substantial, not absolute, identity is required, found in community of interest even if a party was not impleaded before; reversal of positions as plaintiffs and defendants does not negate identity. Applied to test but ultimately find no community of interest because capacities diverged.
• Co-ownership; suits by co-owners — A co-owner may sue to recover co-owned property for the benefit of all without joining all co-owners, who are then merely necessary parties, and a favorable judgment benefits all while an adverse judgment or dismissal does not prejudice unimpleaded co-heirs. If the co-owner sues for himself alone in repudiation of co-ownership, however, other co-owners are indispensable parties whose absence voids subsequent proceedings for want of jurisdiction and prevents finality. Applied to distinguish Cecilia Macaspac’s personal reconveyance claim from respondents’ co-ownership claim and to explain why no valid res judicata could arise.
• Reconveyance based on void or fictitious deed — An action for reconveyance on the ground that title was obtained by fictitious deed is virtually an action for declaration of nullity, which does not prescribe. Applied to sustain timeliness despite lapse from the 1976 sale and 1984 inscription.
• Implied trust; possession defeats prescription — One acquiring property through fraud becomes by operation of law a trustee of an implied trust; reconveyance prescribes in ten years only when plaintiff is dispossessed and reconveyance is actually needed, otherwise the subsisting possession makes the action one to quiet title which is imprescriptible. Applied where respondents alleged continued residence since birth.
• Laches against imprescriptible rights — Laches, a doctrine in equity, may be invoked only in the absence of and never against statutory law, and cannot resist enforcement of an imprescriptible legal right. Applied to reject laches alongside prescription.
• Innocent purchaser for value — Reconveyance will not prosper against an innocent purchaser for value, but such protection must be litigated on the merits. Applied to defer resolution to trial rather than dismissal.

• "Forum shopping exists when the elements of litis pendentia are present or when a final judgment in one case will amount to res judicata in the other." — States the controlling test for forum shopping used to frame the litis pendentia inquiry.
• "There is substantial identity of parties when there is a community of interest between a party in the first case and a party in the second case, even if the latter was not impleaded in the first case." — Defines the substantial-identity standard later qualified by capacity and privity analysis for co-owners.
• "The action for reconveyance on the ground that the certificate of title was obtained by means of a fictitious deed of sale is virtually an action for the declaration of its nullity, which does not prescribe." — Articulates the imprescriptibility ratio for the prescription issue.
• "Laches is a doctrine in equity, which may be used only in the absence of, and never against, statutory law." — Provides the canonical limit on laches invoked to reject the equitable defense against an imprescriptible right.

• Nery vs Leyson, 393 Phil. 644 (2000) — Followed on identity of causes of action by same-evidence test and on co-owner privity, capacity, and effect of dismissal on non-joining co-heirs.
• Baloloy vs Hular, G.R. No. 157767, September 9, 2004 — Followed on necessity of impleading co-owners when suing for sole benefit and that favorable judgment benefits others while adverse judgment does not prejudice unimpleaded co-owners.
• Philippine National Bank vs Heirs of Militar, G.R. No. 164801, August 18, 2005 — Followed that reconveyance based on fictitious sale is declaration of nullity which does not prescribe and that laches cannot defeat an imprescriptible right.
• Spouses Aguirre vs Heirs of Villanueva, G.R. No. 169898, June 8, 2007 — Followed on implied trust, ten-year prescription only when dispossessed, and quieting-of-title character when possessor sues.
• Sendon vs Ruiz, 415 Phil. 376 (2001) — Cited for substantial identity through community of interest.
• Agilent Technologies Singapore (PTE) Ltd. vs Integrated Silicon Technology Philippines Corporation, G.R. No. 154618, April 14, 2004 — Cited that reversal of parties’ positions does not negate identity for litis pendentia.
• Korea Exchange vs Gonzales, G.R. Nos. 142286-87, April 15, 2005 — Cited that same evidence sustaining both actions establishes identity of causes of action despite different reliefs.
• Juan vs Go Cotay, 26 Phil. 328 (1913) — Discussed and distinguished on petitioners’ claim that non-joinder of a non-necessary party preserves identity.

Consuelo Ynares-Santiago, Chairperson, Ma. Alicia Austria-Martinez, Minita V. Chico-Nazario, Ruben T. Reyes