G.R. No. L-25563 July 28, 1972
MARIANO TAMAYO, petitioner, vs. AURELIO CALLEJO and the HON. COURT OF APPEALS, respondents.

FACTS

The spouses Vicente Tamayo and Cirila Velasco-Tamayo owned a parcel of land. Prior to February 1, 1912, they sold a northern portion to Fernando Domantay. Vicente Tamayo later died, and his widow waived her rights in favor of their sons, Mariano and Marcos Tamayo, who were declared sole heirs. On September 29, 1913, the Tamayo brothers applied for the registration of the land, alleging inheritance from their father. A judgment directed registration in their names, and Original Certificate of Title (OCT) No. 2612 was issued on November 15, 1915. The application and title did not exclude the portion previously sold to Domantay. On August 22, 1918, Domantay sold the same land to Aurelio Callejo, who took possession.
Subsequently, Mariano Tamayo became the sole registered owner. In 1952, when a surveyor attempted to subdivide the land for a sale Mariano had made to a third party, Callejo prevented entry, asserting his claim. Callejo then requested Tamayo to exclude the land from his title, but Tamayo refused. Callejo annotated an adverse claim on the title and, on June 25, 1952, filed a complaint for reconveyance against Mariano Tamayo, later amending it to include Marcos Tamayo. The trial court dismissed the complaint, finding the land claimed was not included in the titles. The Court of Appeals reversed this decision.

ISSUE

The primary issue is whether Callejo’s action for reconveyance, based on an implied trust arising from the erroneous inclusion of his land in the Tamayos’ certificate of title, had prescribed.

RULING

The Supreme Court affirmed the Court of Appeals, ruling that the action had not prescribed. The legal logic is grounded in the nature of the trust involved. When Mariano and Marcos Tamayo applied for registration of the entire land, including the portion their parents had already sold to Domantay, and obtained a title in their names, an implied trust was created by operation of law in favor of the true owner, Domantay, and subsequently, Callejo. The registered owners became trustees of the property for the benefit of the rightful owner.
The Court held that an action for reconveyance based on such an implied trust is imprescriptible as long as the land remains registered under the Torrens system in the name of the trustee. The prescriptive period does not run against the true owner because the possession of the trustee is not adverse. Prescription would only begin if the trustee repudiates the trust by performing an act of unequivocal adverse ownership, making such repudiation known to the beneficiary. In this case, no such clear repudiation was proven to have been communicated to Callejo before the action was filed. The Court also addressed ancillary matters, modifying the decision to remand the case for a survey to precisely define the area for segregation and reconveyance to Callejo. The defense of a purchaser in good faith was deemed unavailable as it was not pleaded in the lower courts.