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G.R. No. 173441, December 3, 2009 HEIRS OF SOFIA QUIRONG, Represented by ROMEO P. QUIRONG, Petitioners, vs.

DEVELOPMENT BANK OF THE PHILIPPINES, Respondent. The Facts: Emilio Dalope died leaving a 589-square meter untitled lot in Sta. Barbara, Pangasinan, to his wife, Felisa, and their nine children, one of whom was Rosa Dalope-Funcion. To enable Rosa and her husband Antonio Funcion obtain a loan from respondent DBP, Felisa sold the whole lot to the Funcions. Having transferred the tax declaration of the lot in their names, the Funcions then mortgaged the lot with the DBP. After the Funcions failed to pay their loan, the DBP foreclosed the mortgage on the lot and consolidated ownership of it on June 17, 1981. On September 20, 1983 the DBP conditionally sold the lot to Sofia Quirong (now substituted by the petitioners) for the price of P78,000.00. In their contract of sale, Sofia Quirong waived any warranty against eviction. Quirong then gave a down payment of P14,000.00. Two months after that sale, Felisa and her eight children (Dalope heirs) filed an action for partition and declaration of nullity of documents with damages against the DBP and the spouses Rosa and Antonio Funcion (Funcions) before the RTC of Dagupan City in Civil Case D-7159. Despite the suit, DBP executed a deed of absolute sale on December 27, 1984 in favour of Sofia Quirong over the subject lot carrying the same waiver of warranty against eviction. During the pendency of Civil Case No. D-7159 filed by the Dalope heirs, petitioners asked the RTC to award the lot to them and, in the alternative, to allow them to recover the lot’s value from the DBP. But due to their failure to file a formal offer of evidence, the RTC did not rule on the merits of petitioners’ claim. 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 as they prejudiced the shares of the eight other children of Emilio and Felisa. The DBP failed to file a motion for reconsideration nor an appeal of this decision of the RTC, hence, said decision became final and executory on January 28, 1993. When the RTC issued a writ of execution, the DBP filed a motion to quash on the ground that the decision failed to state by metes and bounds the particular portions of the lot that would be assigned to the other Dalope heirs. Its motion having denied by the RTC, DBP filed a special civil action of certiorari directly with the Supreme Court in G.R. 116575 entitled DBP v. Fontanilla. However, on September 7, 1994, the Supreme Court issued a Resolution denying DBP’s petition for the latter’s failure to pay the prescribed fees. This resolution became final and executory on January 17, 1995. On June 10, 1998, petitioners filed an action for rescission of the contract of sale between their predecessor Sofia Quirong and the DBP before the RTC of Dagupan in Civil Case CV-9802399-D. Petitioners 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. They also asked for the reimbursement of the price of P78,000.00 that Sofia Quirong paid to DBP plus damages. DBP filed a motion to dismiss but the RTC denied their motion. On June 14, 2004, the RTC of Dagupan rendered a decision rescinding the sale between Sofia Quirong and the DBP and ordering the latter to return to petitioners the P78,000.00 that Sofia Quirong paid to it. On appeal by the DBP, the Court of Appeals (CA) reversed the RTC decision and dismissed the heirs’ action on the ground of prescription. Petitioners moved for reconsideration but the appellate court denied it, thus, this petition. The Issues: I. II. Is petitioners’ action for rescission of DBP’s sale of the subject property to Sofia Quirong already barred by prescription? If in the negative, are petitioners entitled to the rescission of the DBP’s sale of the subject lot to their predecessor Sofia Quirong considering that they have been evicted from said lot?

The Rulings: Petitioners argued that that the prescriptive period of four years set by Article 1389 of the Civil Code within which they can file an action for rescission should be reckoned from January 17, 1995, the date that the Supreme Court’s resolution in G.R. 116575 became final and executory. However, the Court ruled that the incident in G.R. 116575 did not deal with the merit of the RTC decision in Civil Case D-7159. It dealt only with the issuance of the writ of execution from which the DBP failed to appeal within the time set for such appeal. And since the Court’s September 7, 1994 resolution in G.R. 116575which became final and executor on January 17, 1995 did not dwell on the merits of the RTC decision in Civil Case D-7159, the Court ruled that it should not be deemed to be the period from which the 4-year prescriptive period should be reckoned. The reckoning date should be January 28, 1993, the date of finality of the RTC’s decision in Civil Case D-7159. Hence, the Court ruled that petitioner’s action for rescission which they filed on June 10, 1998 was already barred by prescription, the same being filed more than four years from January 28, 1993. Having resolved the 1st issue, the Court deemed it would no longer serve any useful purpose for it to rule on 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. WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court of Appeals.