The only issue in this case is who has a better right over the properties.
The petition is meritorious.
The Court agrees with the CA’s disquisition that an action for reconveyance can indeed be barred by prescription. In a long line of cases decided by this Court, we ruled that an action for reconveyance based on implied or constructive trust must perforce prescribe in ten (10) years from the issuance of the
However, there is an exception to this rule. In the case of Heirs of Pomposa Saludares v. Court of Appeals,[27] the Court reiterating the ruling in Millena v. Court of Appeals,[28] held that there is but one instance whenprescription cannot be invoked in an action for reconveyance, that is, when the plaintiff is in possession of the land to be reconveyed. In Heirs of Pomposa Saludares,[29] this Court explained that the Court in a series of cases,[30] has permitted the filing of an action for reconveyance despite the lapse of more than ten (10) years from the issuance of title to the land and declared that said action, when based on fraud, is imprescriptible as long as the land has not passed to an innocent buyer for value. But in all those cases, the common factual backdrop was that the registered owners were never in possession of the disputed property. The exception was based on the theory that registration proceedings could not be used as a shield for fraud or for enriching a person at the expense of another.
In Alfredo v. Borras,[31] the Court ruled that prescription does not run against the plaintiff in actual possession of the disputed land because such plaintiff has a right to wait until his possession is disturbed or his title is questioned before initiating an action to vindicate his right. His undisturbed possession gives him the continuing right to seek the aid of a court of equity to determine the nature of the adverse claim of a third party and its effect on his title. The Court held that where the plaintiff in an action for reconveyance remains in possession of the subject land, the action for reconveyance becomes in effect an action to quiet title to property, which is not subject toprescription.
The Court reiterated such rule in the case of Vda. de Cabrera v. Court of Appeals,[32] wherein we ruled that the imprescriptibility of an action for reconveyance based on implied or constructive trust applies only when the plaintiff or the person enforcing the trust is not in possession of the property. In effect, the action for reconveyance is an action to quiet the property title, which does not prescribe.
Similarly, in the case of David v. Malay[33] the Court held that there was no doubt about the fact that an action for reconveyance based on an implied trust ordinarily prescribes in ten (10) years. This rule assumes, however, that there is an actual need to initiate that action, for when the right of the true and real owner is recognized, expressly or implicitly such as when he remains undisturbed in his possession, the statute of limitation would yet be irrelevant. An action for reconveyance, if nonetheless brought, would be in the nature of a suit for quieting of title, or its equivalent, an action that is imprescriptible. In that case, the Court reiterated the ruling in Faja v. Court of Appeals[34] which we quote:
x x x There is settled jurisprudence that one who is in actual possession of a piece of land claiming to be owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in possession. No better situation can be conceived at the moment for Us to apply this rule on equity than that of herein petitioners whose mother, Felipa Faja, was in possession of the litigated property for no less than 30 years and was suddenly confronted with a claim that the land she had been occupying and cultivating all these years, was titled in the name of a third person. We hold that in such a situation the right to quiet title to the property, to seek its reconveyance and annul any certificate of title covering it, accrued only from the time the one in possession was made aware of a claim adverse to his own, and it is only then that the statutory period of prescription commences to run against such possessor.
In this case, petitioner’s possession was disturbed in 1983 when respondent Jose filed a case for recovery of possession.[35] The RTC of Iloilo City ruled in respondent Jose’s favor but the CA on
The Court further observes that the circuitous sale transactions of these properties from respondent Jose to Catalino Torre, then to Antonio Doronila, Jr., and back again to respondent Jose were quite unusual. However, this successive transfers of title from one hand to another could not cleanse the illegality of respondent Jose’s act of adjudicating to himself all of the disputed properties so as to entitle him to the protection of the law as a buyer in good faith. Respondent Jose himself admitted that there exists other heirs of the registered owners in the OCTs. Even the RTC found that “[t]hese allegations contained in the Affidavit of Adjudication executed by defendant Jose B. Tiongco are false because defendant Jose B. Tiongco is not the only surviving heir of Jose Tiongco, Matilde Tiongco, Vicente Tiongco and Felipe Tiongco as the latters have other children and grandchildren who are also their surviving heirs.”[37]
In the case of Sandoval v. Court of Appeals,[38] the Court defined an innocent purchaser for value as one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property. He is one who buys the property with the belief that the person from whom he receives the thing was the owner and could convey title to the property. A purchaser can not close his eyes to facts which should put a reasonable man on his guard and still claim that he acted in good faith.
And while it is settled that every person dealing with a property registered under the
In this case, when the subject properties were sold to Catalino Torre and subsequently to Doronila, respondent Jose was not in possession of the said properties. Such fact should have put the vendees on guard and should have inquired on the interest of the respondent Jose regarding the subject properties.[40] But regardless of such defect on transfer to third persons, the properties again reverted back to respondent Jose. Respondent Jose cannot claim lack of knowledge of the defects surrounding the cancellation of the OCTs over the properties and benefit from his fraudulent actions. The subsequent sale of the properties to Catalino Torre and Doronila will not cure the nullity of the certificates of title obtained by respondent Jose on the basis of the false and fraudulent Affidavit of Adjudication.
x x x."
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