G.R. No. 211425 -

Ruling

WHEREFORE, the instant appeal is hereby GRANTED. The April 23, 2009 Decision of the Regional Trial Court, Branch 5, Tuguegarao City, Cagayan is REVERSED and judgment is rendered: Declaring null and void the Deed of Absolute Sale dated September 5, 1969 being fictitious and inexistent and without any legal force and effect; and Ordering the Heirs of Tomas Arao, particularly Eulalia Arao­Maggay and Felipa Arao-Delelis, to surrender possession of and reconvey to the Heirs of Pedro Eclipse title to Lot No. 1667. [23] Petitioners filed a Motion for Reconsideration [24] of the aforesaid June 7, 2013 CA Decision. The said Motion was, however, denied by the CA in a Resolution [25] dated January 30, 2014. Aggrieved, petitioners, on April 15, 2014, filed the instant petition with this Court. In their appeal, petitioners argued that respondents are barred by laches from pursuing their cause of action against the petitioners given their inaction for more than 30 years, despite being fully aware of the petitioners' adverse possession and claim over the subject property. They also averred that their claim of ownership is not based on the forged Deed of Sale allegedly executed on September 5, 1969, but on the Deed of Sale entered into between the heirs of Policarpio and Paulino on June 25, 1940. However, assuming that the title of Tomas was fraudulent, petitioners maintained that they nevertheless acquired a valid right and legal title thereon being buyers in good faith and for value, pursuant to the settled rule that a forged deed of sale may be a valid source of legal rights. Finally, petitioners averred that respondents are not entitled to the reconveyance of the subject property since they failed to prove that they are the owners of the lot in litigation and that petitioners' registration of the property is erroneous, fraudulent and wrongful. They argued that even assuming that reconveyance is proper, the 10-year prescriptive period to institute the same had long prescribed. The Issues From the arguments set forth by petitioners, three essential Issues were raised: WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT LACHES IS NOT APPLICABLE IN THIS CASE. WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISREGARDING THE DEED OF SALE DATED JUNE 25, 1940 ENTERED INTO BETWEEN THE HEIRS OF POLICARPIO ECLIPSE AND PAULINO ARAO. WHETHER OR NOT THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN NOT DECLARING PETITIONERS HEREIN AS BUYERS IN GOOD FAITH AND FOR VALUE. [26] The Court's Ruling Before resolving whether laches has set in, it is important to determine first how and by what contract Tomas (petitioners' predecessor-in-interest) acquired the title of the subject lot in his name. This is because if the assailed contract is void ab initio , then laches will not apply. Article 1410 of the Civil Code states that an "action to declare the inexistence of a void contract does not prescribe." The foregoing provision is echoed by this Court in the case of Fil-Estat