Encarnacion v. Severina Realty Corporation

Summary

The Supreme Court reversed the Court of Appeals decision that dismissed a property ownership case on grounds of prescription and res judicata. The Espiritu heirs challenged the validity of a deed of sale involving approximately 10,510 square meters of land, claiming it was fictitious and simulated. The Court held that actions for declaration of inexistence of contracts under Article 1410 of the Civil Code do not prescribe, and that res judicata did not apply because there was no identity between the land registration proceedings and the action for contract nullification. The case was remanded to the trial court, establishing important precedent on imprescriptible actions for void contracts and the limits of res judicata in property disputes.