G.R. No. L-48153. April 30, 1984.
ESCOLASTICO BUSTARGA and FORTUNATA BUSTARGA NOTORIO, petitioners, vs. FELICIANO NAVO II and COURT OF APPEALS, respondents.

FACTS

Feliciano Navo II purchased, between 1948 and 1949, several adjoining parcels of land in Camarines Sur, which were consolidated as Lot 2636. He possessed this lot openly and in the concept of an owner. Navo and the petitioners, Escolastico Bustarga and Fortunata Bustarga Notorio, are first cousins. Without Navo’s knowledge, the petitioners, representing themselves as the “Heirs of Feliciana Navo,” filed a free patent application for Lot 2636. Based on their false representation of being in actual possession, Free Patent No. 31233 and Original Certificate of Title No. 2245 were issued to them on May 12, 1955. They subsequently obtained Transfer Certificate of Title No. 1570 for Lot 2636 and an adjacent lot.
Navo discovered the fraud and filed an action for reconveyance against the Bustargas on July 7, 1966, more than ten years after the issuance of the patent and title. During pre-trial, the parties agreed that if a court-appointed commissioner found that the petitioners’ title included land not adjudicated to them in a prior case (specifically, Lot 2636), such land would be reconveyed to Navo. The commissioner’s report confirmed that TCT No. 1570 included Lot 2636, which Navo possessed and which was never involved in the prior litigation concerning the other lot.

ISSUE

May an action for reconveyance be maintained by the true possessor-owner against a registered patentee who obtained title through fraud, even if filed more than ten years after the title’s issuance?

RULING

Yes, the action for reconveyance is proper and not barred by prescription. The Court affirmed the decisions of the lower courts ordering the Bustargas to reconvey Lot 2636 to Navo. The legal logic proceeds from principles of equity and the nature of the action. An action for reconveyance based on fraud is imprescriptible where the registered owner was never in possession of the land. Here, the Court of Appeals found as a fact that the Bustargas “were never in possession” of Lot 2636 and that the patent was obtained “under false pretenses.” Navo, the true owner in possession, sought not the cancellation of the Torrens title but the enforcement of a constructive trust in his favor.
The defense of prescription was deemed waived by the petitioners’ pre-trial stipulation agreeing to reconveyance if Lot 2636 was found not to be theirs. More fundamentally, the ruling in Vital vs. Anore (90 Phil. 955) controls. It holds that while a Torrens title issued on a free patent may become indefeasible after one year, an action for reconveyance based on fraud survives if the registered owner (the patentee or successor) knew the land belonged to another who was in possession. In such a case, equity demands that the court, without canceling the title, can compel the fraudulent holder to reconvey the property to the true owner. The ten-year period for reopening or reviewing a decree of registration does not bar this equitable remedy. The Court emphasized that allowing the Bustargas to retain title to land they never possessed would perpetuate an intolerable injustice, justifying the grant of reconveyance.