GR 185757; (March, 2016) (Digest)
G.R. No. 185757 . March 02, 2016.
SPOUSES VIRGILIO DE GUZMAN, JR. [SUBSTITUTED BY HIS WIFE, LYDIA S. DE GUZMAN, AND CHILDREN, NAMELY, RUEL S. DE GUZMAN, ET AL.] AND LYDIA S. DE GUZMAN, PETITIONERS, VS. COURT OF APPEALS, MINDANAO STATION, LAMBERTO BAJAO, HEIR OF SPOUSES LEONCIO BAJAO AND ANASTACIA Z. BAJAO, RESPONDENTS.
FACTS
The property in dispute is a 480-square meter portion of Lot No. 532, originally owned by respondent Lamberto Bajao’s parents, the Spouses Bajao, who acquired it via free patent. Petitioners Spouses De Guzman purchased this portion through two Deeds of Absolute Sale in 1969 and 1970. They took possession, fenced the area, introduced improvements, and paid realty taxes. In 1980, they annotated an adverse claim on the title. After the death of the father-vendor, respondent, together with his mother, executed an Extrajudicial Settlement of Estate in 1980, subdividing Lot No. 532. The disputed 480-square meter lot, despite the prior sale and adverse claim, was included in the portion adjudicated to respondent. He subsequently obtained a new title in his name and caused the cancellation of the petitioners’ adverse claim.
ISSUE
Whether the action for reconveyance filed by petitioners is barred by prescription.
RULING
No, the action is not barred by prescription. The Supreme Court reversed the Court of Appeals and reinstated the trial court’s decision ordering reconveyance. The Court held that an action for reconveyance based on an implied trust prescribes in ten years from the issuance of the title upon which the cause of action is based. Here, the cause of action accrued from the registration of the Extrajudicial Settlement and the issuance of the new Transfer Certificate of Title (TCT) in respondent’s name in 1981, which fraudulently included the property already sold to petitioners. The ten-year prescriptive period commenced from that date. Petitioners filed their Complaint for Reconveyance in 2000, which was beyond the ten-year period. However, the Court ruled that prescription did not apply because petitioners were in actual, open, and continuous possession of the land. When the claimant is in possession of the property, the right to seek reconveyance does not prescribe, as the action is deemed one to quiet title. Possession is an affirmative defense that negates prescription. Since petitioners had been in possession since the sale, their action remained imprescriptible. The Court found respondent in bad faith for registering the settlement despite knowledge of the prior sale and adverse claim, making him a trustee under an implied trust for the benefit of the petitioners.