G.R. No. 138971 ; June 6, 2001
PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA), petitioner, vs. HON. RUMOLDO R. FERNANDEZ, Regional Trial Court of Lapu-Lapu City (Branch 54); and the Heirs of the Deceased Spouses JUAN CUIZON and FLORENTINA RAPAYA, respondents.

FACTS

The subject of the controversy is Lot No. 4673, covered by Original Certificate of Title (OCT) No. RO-2537 registered in the names of Florentina Rapaya and others. On May 15, 1982, Jorgea Igot-Soroño, Frisca Booc, and Felix Cuizon executed an Extrajudicial Partition, declaring themselves as the only surviving heirs, leading to the issuance of TCT No. 12467 on July 8, 1982. This lot was involved in expropriation proceedings (Civil Case No. 510-L). The Regional Trial Court (RTC) of Lapu-Lapu City (Branch XVI) rendered a partial Decision on August 11, 1982, approving a Compromise Agreement between the Export Processing Zone Authority (EPZA, now PEZA) and the new registered owners (Jorgea Igot-Soroño, Frisca Booc, and Felix Cuizon), whereby EPZA would pay P68,070 as just compensation. Consequently, petitioner acquired title over the lot, and TCT No. 12788 was issued in its name on October 13, 1982. On July 29, 1996, private respondents (the Heirs of the Deceased Spouses Juan Cuizon and Florentina Rapaya) filed a Complaint for Nullity of Documents, Redemption and Damages (Civil Case No. 4534-L) against petitioner and Jorgea Igot-Soroño et al., alleging they were excluded from the extrajudicial settlement and seeking the nullification of TCT No. 12788. Petitioner filed a Motion to Dismiss on the ground of prescription, which the RTC denied. The Court of Appeals sustained the RTC, dismissing petitioner’s Petition for Certiorari.

ISSUE

1. Whether or not the appellate court erred in not holding that private respondents’ claim against expropriated property had prescribed.
2. Whether or not the appellate court erred in not holding that reconveyance does not lie against the expropriated property.

RULING

The Supreme Court GRANTED the Petition, REVERSED the Court of Appeals Decision, SET ASIDE the RTC Orders, and DISMISSED Civil Case No. 4534-L as against petitioner.
On the first issue, the Court held that the action had prescribed. While an action for reconveyance based on an implied or constructive trust prescribes in ten years from the issuance of the title, which operates as a constructive notice, the ten-year period commenced from July 8, 1982 (the date of the issuance of TCT No. 12467 to the alleged exclusive heirs). Private respondents filed their complaint only on July 29, 1996, which was beyond the ten-year prescriptive period. The Court rejected the application of the rule on imprescriptibility of an action for reconveyance filed by an heir excluded from an extrajudicial settlement, as such rule applies only to the heirs involved and not to a subsequent innocent purchaser for value. On the second issue, the Court held that reconveyance no longer lies because petitioner was an innocent purchaser for value. The property was acquired through a lawful expropriation proceeding and a Compromise Agreement approved by the court. Petitioner had the right to rely on the certificate of title presented by the registered owners and was not required to go beyond it to inquire into the circumstances of their acquisition. The remedy of reconveyance cannot be availed of against one who has purchased the property and for value, as petitioner had.