G.R. No. 149906 December 26, 2002
Spouses HORACIO and FELISA BENITO, petitioners, vs. AGAPITA SAQUITAN-RUIZ, respondent.

FACTS

On April 1, 1999, respondent Agapita Saquitan-Ruiz filed a civil suit against petitioner-spouses Horacio and Felisa Benito for “specific performance with declaration of nullity of titles and damages.” The Complaint alleged that on April 17, 1979, the petitioners sold to her a 60-square-meter lot in Pasig City. Despite repeated demands, they failed to deliver or cause the issuance of a new certificate of title in her name. The Complaint further alleged that the petitioners, in bad faith and with fraudulent intent, re-subdivided the whole parcel of land from three lots into five lots, causing the issuance of five new Transfer Certificates of Title (TCT Nos. PT-101743 to PT-101747) on March 25, 1996, which included the portion they had previously sold to the respondent, thereby rendering said titles null and void. The Regional Trial Court (RTC) dismissed the Complaint on grounds of prescription and/or laches, ruling that the action to compel performance was filed 20 years after the sale, and that an action to invalidate titles on the ground of fraud prescribes in one year from the entry of the decree of registration. The RTC also denied the respondent’s Motion for Reconsideration and for Leave to Amend Complaint. The Court of Appeals reversed the RTC, holding that the respondent’s cause of action was for reconveyance, which prescribes in ten years from the issuance of the assailed certificates of title, and thus had not prescribed. The CA reinstated the Complaint, granted the amendment, and remanded the case to the trial court.

ISSUE

Whether the Court of Appeals erred in reinstating the respondent’s Complaint, granting its amendment, and remanding the case to the trial court, considering the grounds of prescription, laches, and the alleged transfer of the property to a third party.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ Decision. The Court ruled that the allegations in the Complaint constitute a suit for reconveyance, not an action to invalidate certificates of title based on fraud. 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 March 25, 1996, making the filing on April 1, 1999, timely. The Court further held that the action was not rendered moot by the alleged sale of the property to a third party (Basilia dela Cruz) at a public auction, as the respondent filed the Complaint during the redemption period, and a third party’s claim may be vindicated in a separate action. Moreover, the respondent was in actual possession of the disputed property, and the right to seek reconveyance does not prescribe when the claimant is in possession. On the issue of laches and non-payment of consideration, the Court ruled that these are factual matters requiring evidence and cannot be resolved in a motion to dismiss. The seller cannot unilaterally rescind the contract without judicial approval, and there was no showing of the respondent’s unreasonable delay in asserting her rights. The amendment of the Complaint was properly allowed, as it did not substantially alter the cause of action for reconveyance. The case was remanded to the trial court for further proceedings.