G.R. No. 102313 , July 12, 2001
R. F. NAVARRO & CO., INC., HEIRS OF LAURA ADEA NAVARRO, and HEIRS OF R.F. NAVARRO, SR., petitioners, vs. HON. FORTUNATO A. VAILOCES, HON. NATHANAEL P. DE PANO, JR., HON. BONIFACIO A. CACDAC, JR., HEIRS OF EULOGIO RODRIGUEZ, SR., THRU CONSTANCIO S. RODRIGUEZ and LUZON SURETY CO., INC., respondents.

FACTS

On June 17, 1975, petitioners filed an action for annulment of documents, titles and/or reconveyance with damages against the heirs of Eulogio Rodriguez, Sr. and Luzon Surety Co., Inc. The subject properties are two adjacent lots and improvements in Binondo, Manila, covered by TCT No. T-63345 in the name of respondent Luzon Surety Co., Inc. Petitioners claimed ownership by virtue of TCT No. 61619 in the name of Raymundo F. Navarro, his wife Laura Adea Navarro, and R.F. Navarro & Company. They alleged that Raymundo Navarro entrusted the property to Eulogio Rodriguez, Sr., and after Navarro’s death, they discovered Rodriguez had fraudulently transferred the property to his name and then to Luzon Surety Co., Inc. without consideration and without their knowledge. Private respondents defended the transfer by presenting a Deed of Sale with Assumption of Mortgage executed on August 12, 1941, by Raymundo F. Navarro, Sr. in favor of Eulogio Rodriguez, Sr., which led to the cancellation of TCT No. 61619 and issuance of TCT No. 62411 in Rodriguez’s name. Subsequently, Rodriguez executed a Deed of Assignment with Transfer of Mortgage in favor of Luzon Surety Co., Inc., resulting in TCT No. T-63345. They also asserted that Raymundo Navarro never questioned the transfer during his lifetime and that petitioners’ cause of action had prescribed and was barred by laches. The trial court ruled for petitioners, declaring TCT No. 63345 null and void. The Court of Appeals reversed, dismissing the complaint.

ISSUE

Whether the Court of Appeals erred in reversing the trial court’s decision and dismissing petitioners’ complaint, primarily on the grounds of prescription and laches.

RULING

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that petitioners’ action was barred by prescription and laches. An action for reconveyance based on an implied or constructive trust prescribes in ten years from the issuance of the title, which in this case was in 1941. Petitioners filed their suit only in 1975, well beyond the prescriptive period. Furthermore, petitioners were guilty of laches for their unreasonable delay of 29 years (from discovery in 1970 to filing in 1975) or even 34 years (from the Supreme Court decisions in 1949) in asserting their rights, despite having constructive notice of the registration in Luzon Surety’s name since 1941 and the latter’s continuous possession and receipt of fruits from the property. The Court found no evidence to support petitioners’ claim of a trust relationship and emphasized that equity aids the vigilant, not those who sleep on their rights.